Index for April 2016

Volume 15, Issue 4

  • (OECD, Paris, 6 April 2016) In 2015, the ECG agreed that a thorough review of the 2012 Recommendation was not necessary, given Members’ limited implementation experience, but that some of its elements should be revised. The Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence was adopted by the OECD Council on 28 June 2012; a revised text was subsequently adopted by the OECD Council on 6 April 2016 based on discussions finalized in November 2015.

  • (WWF, Brussels, 8 March 2016) A WWF short brief to the OECD's Export Credit Working Group (ECG) highlights scientific research showing that new coal plants are not compatible with 1.5/2°C climate change scenarios, and what this should mean in terms of implementation of the OECD sector understanding on export credits for coal-fired electricity generation adopted on 17 November 2015. A full briefing with detailed NGO views/recommendations will be presented at the next OECD ECG meeting planned for the 6th to 10th of June 2016. In order to contribute to the fight against climate change, the OECD Export Credit Group on the 17th of November 2015 adopted a ‘Sector Understanding on export credits for coal-fired electricity generation projects’. This Sector Understanding has been added as Annex VI to the Arrangement on Officially Supported Export Credits.

  • (Reuters, Paris/Berlin, 8 April 2016) - France and Germany have joined Britain in suspending export credit facilities for Airbus jet deliveries, expanding the fallout from a potential corruption probe in Britain, several people familiar with the matter said on Friday. The move follows Britain's decision last week to suspend financing and alert the Serious Fraud Office after Airbus Group said it had found anomalies over the declaration of overseas agents and that it had itself notified the UK authorities. Unusually, it leaves the world's two largest planemakers, Airbus and Boeing, both facing paralysis over government export financing as Congressional delays leave U.S. Export Import bank unable to support Airbus's U.S. rival. To make things more complex, Airbus Group SE may open itself up to financing from an unlikely source when the first jet is delivered Monday from its new factory in Alabama: the U.S. Export-Import Bank.

  • (Space News, London, 15 April 2016) Britain’s export-credit agency may be the most attractive source of satellite project financing that almost none one has heard of or uses. While its more active counterparts in the United States and France are most comfortable guaranteeing loans only when a large majority of the work done in these nations, U.K. Export Finance is willing to support projects with as little as 20 percent U.K. content, said Peter Maplestone, senior underwriter at the agency and responsible for satellite export programs.

  • (Sabanci University, Istanbul, Novermber 2015) A November 2015 report from the Sabancı University Istanbul Policy Center recently translated to English addresses the current status of coal in Turkey as an energy and greenhouse gas source, its impacts on health, the association between increasing the share of coal in electricity generation and climate and economic policies, and the discussions on “clean coal.” The share of coal, oil, and gas in Turkey’s primary energy supply was 88% in 2013. Almost more than 70% of electricity is produced from fossil fuels. Total installed capacity is 71 GW, 20.5% of this coming from coal-fired power plants. The installed capacity of coal-fired power plants has increased by 77% when compared to 2004. According to a September 2015 Oil Change International report on The Cost of Subsidizing Fossil Fuel Production In Turkey, "most of the US$1.5 billion of international public finance going to coal in Turkey came from ECAs, specifically OECD export credit agencies. (p.12)

  • (Global Trade Review, Paris, 16 April 2016) France’s export credit agency (ECA) activities will be placed under the responsibility of the Banque Publique d’Investissement (Bpifrance) by the end of this year, now that the conditions of the transfer from Coface have been agreed on. Under the agreement, all of Coface’s public export guarantee activities will be moved to Bpifrance Assurance Export, a new subsidiary created for that purpose. All employees working on these activities will become Bpifrance employees, and even relevant IT systems will be transferred.

  • (Reuters, Beijing, 20 April 2016) China will take steps to boost exports, including encouraging banks to boost lending, expanding export credit insurance and raise tax rebates for some firms, the cabinet said on Wednesday, in the latest step to underpin growth. The government will also implement proactive import policies, supporting imports of advanced equipment and technology and will step up investment in roads, railways and airports in poorer regions and encourage its less developed western and central provinces to attract investment from more developed eastern provinces.

  • (Financial Times, Tehran/Rome, 12 April 2016) Italian financing agencies have teamed up to give Iran nearly €5bn in credit lines and guarantees for exports, in one of the most significant financial deals with the Islamic Republic since the landmark nuclear agreement that led to lifting of international sanctions. The Cassa Depositi e Prestiti, Italy’s state financing agency, which controls more than €350bn in assets, will issue €4bn in credit lines to Iranian public entities for them to fund big infrastructure projects such as railways and motorways. Italian companies such as Ferrovie dello Stato are expected to participate in those contracts. Sace, Italy’s export credit agency, will support the transactions by providing €4bn in guarantees for those deals and an additional €800m in funding for Italian SME’s doing business in the country.

  • Global call to Exim Bank of India to Stop support for the Rampal Coal Power plant

    (Bank Track, Nijmegen, 19 April 2016) The proposed Rampal coal-fired power plant (also known as the Maitree Super Thermal Power Project) in Bangladesh with the EPs. A July 2015 research report (pdf) shows that serious deficiencies in project design, planning, implementation and due diligence obligations render the project non-compliant with the minimum social and environmental standards established by the Equator Principles, as well as the International Finance Corporation’s Performance Standards which are a key part of the EPs. The Rampal coal plant is a proposed 1320-megawatt (MW) coal-fired power station to be located at Khulna division in southwest Bangladesh. The project is a 50:50 joint venture between the Bangladesh Power Development Board (BPDB) and India's partly state-owned National Thermal Power Corporation (NTPC), which signed a Memorandum of Understanding in August 2010 to jointly implement the project by 2016. The Indian Exim Bank is the main financier of the project and a coalition of Indian and Bangladesh organisations as well as European environmental and finance monitoring NGOs are petitioning them to refrain from financing the Rampal coal power plant.

  • Around 90% of the respondents of the latest edition of the Atradius Payment Practices Barometer survey for Western Europe had invoices paid late by their B2B customers over the past year. Respondents in Great Britain were the hardest hit by late payment from export customers (46.4% of the total value of British export credit sales were reported to have been paid late by B2B customers, compared to a 38.3% average for Western Europe). Late payments resulted in an average of nearly 40% of the total value of B2B receivables being defaulted on. Respondents in Italy and Greece were the most adversely affected by late payments by domestic B2B customers (on average, nearly half of the total value of their B2B invoices were defaulted on, which is around 10% above the average for Western Europe).

  • (Trade & Export Finance, Washngton, 7 April 2016) Donald Trump seems to be on course to win the US Republican nomination. Trump, a conservative, is in favour of small government and it is believed would cheerfully close the US export credit agency, US Ex-Im Bank if he could. And although the ECA is now protected until 2019, a Republican appointed chairman and vice-chairman could effectively muzzle the capabilities of US Ex-Im until that time.

  • (Gulf Times, Doha, 24 April 2016) The fall in crude oil prices has had a significant impact on the fiscal positions of states in the Gulf Cooperation Council (GCC), and a number of infrastructure projects in the region have been delayed for the indefinite future. While GCC economies will continue to pursue infrastructure development as part of non – hydrocarbon diversification there are significant developments in the PPP segment in recent years to encourage the private sector to participate in a diverse range of projects and thus relieve the government from seeking additional debt or to suspend further essential projects. Debt financing for regional PPPs structured on a project finance basis has generally been characterised by long tenors, and mainly sourced from commercial banks and in the case of large projects through export credit agencies (ECAs). GCC governments are expected to pursue private sector financing as a way to plug budgetary gaps for public infrastructure development in a weak oil market.