Index for February 2016

Volume 15, Issue 2

  • (Srijan Lokhit Samiti, 9 February 2016) The Export Import Bank of the United States, a financer of Reliance’s Sasan Power Project in Madhya Pradesh, confirmed serious labour rights violations at the project, including 19 deaths. In the report “Report on Project Financing of Sasan Power Limited” dated September 2015, by the Office of Inspector General of the US governments's ExIm bank, it has been confirmed that Ex-Im Bank’s Chairman expressed his continued disappointment to the CEO of Reliance regarding the “poor safety” practices at the Project. In particular, the Chairman’s letter stated, “the number of all fatalities at the integrated Project is now 19 - which is both tragic and absolutely unacceptable.” Despite that, nothing changed on the ground. Most of these cases were not investigated, nor action taken against the Reliance for this serious lapses. Ex-Im Bank, despite expressing concerns about these cases, failed to take any action to ensure that such cases do not recur. A 15 October 2015 Los Angeles Times article also found that "the privately run Sasan power project — backed by hundreds of millions of dollars in U.S. government funding — has also generated land disputes, health and environmental concerns and financial hardship for villagers who say it has delivered little of what was promised."

  • (Trade & Export Finance, London, 8 February 2016) Low prices and dwindling sources of finance are forcing coal producers to turn increasingly to export credit agencies (ECAs) to support their capital needs. But ECAs and their governments, increasingly driven by environmental concerns, show little or no appetite for coal projects... In December 2015, the participants in the OECD Arrangement on Officially Supported Export Credits agreed new restrictions on providing support to inefficient coal power stations, specifically as a way of tackling climate change... The OECD coal ruling was surprisingly popular among member states, with only Australia and Japan consistently opposed to the proposal...After two years of negotiations, the final agreement made one concession, which allows ECAs to support high-efficiency coal project deals.

  • (Trade & Export Finance, London, 29 January 2016) A new law was passed in France last month which will change the face of the country's export credit agency (ECA). After nearly 70 years as France's ECA Coface is set to transfer the handling of state export credit guarantees to French public investment bank, Bpifrance. The change is due to take place at some point in 2016. Sources close to the market state that the move will have a wider impact on French export credit guarantees than merely a name change, and predict that some of the changes could even ensure cheaper pricing on French ECA deals. One of the big amendments which is set to happen is the French state's introduction of direct, rather than indirect guarantees for Bpifrance cover.

  • (Jubilee Debt Campaign, Liege, 10 February 2016) The UK’s Department for International Development is considering using aid money to subsidise lower interest rates for export credits for some low income countries... Under OECD rules, Western government export credit agencies, such as UK Export Finance, are only supposed to lend to low income country governments at lower interest rates. But UK Export Finance does not have such a ‘concessional lending’ arm so the UK government claims it is currently blocked from supporting exports to some low income countries. The response to this problem is to propose to use UK aid money to subsidise lower interest rates. However, it is debatable whether it would be illegal under UK law to subsidise loans tied to British exports, so the proposal is for these subsidies to be available to any export credit agency.

  • (UK Export Finance, London, 28 January 2016) The UK Government's response to its anti-bribery and corruption consultation was published on 28th January 2016. The response is the result of almost a year of consultation. Responses were invited from interested parties by 15 May 2015. Ten responses were received, including from financial institutions, consultancies, Non-Governmental Organizations (NGOs) and one law firm. The report includes annexes reproducing respondent submissions, including ECA Watch member The Corner House (p.29)

  • (Trade & Export Finance, London, 9 February 2016) Reliance Industries’ latest €950 million ($1.04 billion) export credit agency (ECA)-backed deal is expected to push its capital expenditure spree in refinery and petrochemical expansion projects to approximately $17 billion. The Mumbai-based conglomerate – with business across India engaged in energy, petrochemicals, textiles, retail and telecommunications – signed an innovative ‘shopping line’ credit facility with nine banks in December. This deal, which has an 11-year tenor and is covered by German ECA Euler Hermes, will fund the purchase of equipment primarily from German engineers Linde and MAN for Reliance’s largest existing petrochemicals plant, located in Jamnagar in the north-western province of Gujurat.

  • (Trend News Agency, Baku, 30 January 2016) Over the past ten years and after the removal of crippling nuclear-related sanctions on Iran, Hassan Rouhani was the first Iranian president to visit Europe breaking the deadlock over ties between the Islamic Republic and its traditional trade partners. In addition to a raft of deals ranging from energy to industry and environment, Rouhani paved the way for signing a deal which surely opens a new chapter in the history of Iran’s aviation which has suffered from a worn-out fleet over the past decades claiming at least 1,168 lives between 1979 and 2014. After 21 years of embargo on Iran’s aviation, finally on January 28, Tehran signed a historic deal with Airbus for the purchase of 118 airliners (73 widebodies, 45 single aisle) including 12 A380 superjumbos worth $25 billion at list prices...  The airbus deal would not be inked if was not the financial contribution that Rouhani secured at the first stop of his Europe tour in Rome, where the Italian Export Credit Agency, SACE, and Iran’s Central Bank (CBI) signed a settlement agreement for the recovery of the sovereign credit due to SACE by Iranian counterparties.

  • (Get-Top-News, Guangzhou, 19 February 2016) According to Nigeria's Business Daily (February 16) due to the deterioration of Nigerian foreign exchange environment, China Export & Credit Insurance Corporation (also known as Sinosure) will blacklist Nigeria. Nigerian Central Bank (CBN) extreme foreign exchange controls has resulted in market the dollar shortage, international investors and companies have complained about this and more. According to an unnamed informed source, CITIC has notified its customers will not accept deals with Nigeria.