Index for May 2016

Volume 15, Issue 5

  • (Friends of the Earth, Washington, 11 May 2016) The U.S. Export-Import Bank loves to remind us that it is not a development agency, and, therefore, is not held to the same requirements as say a development finance institution. Even still, some of the governments that the head of Ex-Im, Fred Hochberg, has recently been meeting with would be enough to give anyone pause. While Ex-Im Bank’s mission might not be to alleviate poverty, Friends of the Earth hopes that it would not use taxpayer dollars in countries where there have been serious concerns about freedom of the press, safety of their citizens and corruption. Considering that the bank has recently been in hot water for deaths that have occurred at projects it has financed, you would think it would want to be a little more careful with the countries it engages with. This article provides examples of corrupt governments that Ex-Im has recently been communicating with.

  • (Natural Resources Defense Council, New York, 24 May 2016) Co-written by the NRDC, World Wide Fund for Nature (WWF), Oil Change International (OCI), Kiko Network, Japan Center for a Sustainable Environment and Society (JACSES), and Friends of the Earth Japan, a new report (pdf) finds that between 2007 and 2015, the G7 countries have provided more than $42 billion of public finance for coal in the form of direct finance, guarantees, technical assistance, and aid for coal power, coal mining and related projects. G7 nations are trying to sweep the coal financing under the rug by increasing coal financing through export credit agencies and other entities that provide limited disclosure on their projects.

  • (Lexology, London, 2 May 2016) The Treaty on the Functioning of the European Union (TFEU) prohibits State aid to support [subsidize?] export-credit insurance in "marketable risk" countries, which includes EU Member States. Given the difficult economic circumstances in Greece and the resulting dearth of insurance or reinsurance capacity to cover exports to Greece, in December 2013 the European Commission decided to temporarily remove Greece from the list of "marketable risk" countries in 2013 and again in 2015 - an exception set to expire on 30 June 2016. The Commission is now asking Member States, credit insurers, and other interested parties to submit information on private credit insurance capacity; the activity of insurers acting on behalf of or with State guarantee or the state itself in the provision of short-term credit insurance for exports to Greece during the period March 2015 to March 2016; changes in Greece's credit ratings for the last six months; corporate sector performance in Greece; and any other relevant data and information. The deadline for responses is 24 May 2016. [Comment: The TFEU prohibition mirrors the WTO Agreement on Subsidies and Countervailing Measures which prohibits export credit premiums (or interest rates) that "are not inadequate to cover long-term operating costs and losses", i.e. subsidies to national corporations. While professing allegiance to free markets, the EU, OECD and WTO in these ways support negotiations and exceptions which favour national and corporate interests through poorly monitored, non-transparent fora and regulations which are tantamount to a special interest "Gentleman's Club".] 

  • (E&E Daily, Washington, 24 May 24 2016) A long-running political standoff over the Export-Import Bank of the United States threatens to delay billions of dollars in loans and other financial guarantees for overseas nuclear energy projects. Congress last year, after months of acrimony, voted to reauthorize Ex-Im. But the bank's foes on Capitol Hill are succeeding in limiting its ability to operate. Senate Democrats are trying to increase pressure on Senate Banking, Housing and Urban Affairs Chairman Richard Shelby (R-Ala.) to move forward with voting on bank board nominee Mark McWatters. The five-member board currently lacks a quorum and can't approve any export financing deal over $10 million until it adds a third member. McWatters, nominated in January, would fill that opening.

  • (Reuters, Beijing, 8 May 2016) China's cabinet has vowed to take steps to boost exports, including encouraging banks to boost lending, expanding export credit insurance and raise tax rebates for some firms after exports and imports fell more than expected in April, underlining weak demand at home and abroad and cooling hopes of a recovery in the world's second-largest economy.

  • (Bloomberg, Johannesburg, 9 May 2016) South Africa is working on a plan to extend support for the automotive industry beyond the current 2020 timeframe and expand the scope of the policy. The effort forms part of the government’s latest Industrial Policy Action Plan, which also includes steps to improve buying of local products by government departments, develop labor-intensive businesses and increase industrial financing and incentives including stronger export-credit and export credit insurance support.

  • (Business Day Live, Capetown, 9 May 2016) A greater focus on the use of gas as a pillar of industrialisation is one of the new elements in the latest industrial policy action plan (Ipap), launched on Monday by Trade and Industry Minister Rob Davies. The minister said the Ipap 2016 continued the department’s drive to reindustrialise the economy. The targeted industrial financing and incentive support placed more emphasis on export credit and export credit insurance to support the country’s export effort. It also focused more on sector-specific rather than generalised incentives. In particular sector-specific incentives will be designed for the agro-processing and rail components sectors.

  • (TFX News, Rome, 30 May 2016) Italian ECA SACE reopened its support of transactions with Argentina after the Italian undersecretary for development Ivan Scalfarotto last week announced guarantees for €700 million credit lines during his visit to the newly-liberalised Latin American country.

  • (Offshore Suport Journal, London, 27 May 2016) The Norwegian Export Credit Agency (GIEK) has said that the sharp downturn in the offshore industry means that a massive 50 per cent of its NKr102 billion (US$12.3 billion) loan guarantee portfolio has been placed under what it describes as “close scrutiny”. At the end of 2015, NKr87.2 billion of its guarantees were in the oil and gas sector.

  • (BelTA, Minsk, 12 May 2016) Italian insurance companies will assist Belarus in improving its ratings in the Organization for Economic Cooperation and Development (OECD) country risk classification. The matter was discussed at the meeting between Ambassador Extraordinary and Plenipotentiary of Belarus to Italy Alexander Guryanov and Giovanni Castellaneta, Chairman of the Board of Directors at SACE, the Italian Export Credit Agency.

  • (The Australian, Canberra, 5 May 2016) The Germans missed out on the Australian submarines contract to the French. But it looks as if they are about to get deeply involved in the $970 million Mount Peake vanadium-titanium-iron project in the Northern Territory, owned by ASX-listed TNG.TNG went into a trading halt yesterday pending an announcement involving the German engineering and construction giant SMS, previously flagged as a group likely to become involved in the building of the refinery for Mount Peake product at Darwin. When TNG comes back from a trading halt it wouldn't be surprising if it had put out a smallish placement to SMS to cement their new relationship. But more to the point is SMS's history of being a regular user of Germany's Export Credit Agency scheme, meaning it could help provide part of the financing that needs to be secured before Mount Peake becomes a reality.

  • (Azernews, Baku, 16 May 2016) The Trans Adriatic Pipeline's (TAP) project financing continues to progress according to the schedule, said Ian Bradshaw, Managing Director at TAP AG. "TAP expects to secure funding from a number of multilateral institutions, such as the European Bank for Reconstruction and Development and the European Investment Bank, as well as Export Credit Guarantee Agencies of a number of OECD countries involved in the supply of goods and services," Bradshaw said. The 870-kilometer pipeline will be connected to the Trans Anatolian Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy's south.

  • (Stockhouse Publishing, Vancouver, 6 May 2016) China's Yudean Group joins Attarat Power Company as a strategic investor in the Attarat Power Company (APCO) a subsidiary of Eesti Energia of Estonia, the world's biggest oil shale to energy company. Yudean has agreed to purchase 45% of the shares and Malaysia's YTL a further 15% of the shares, with Eesti Energia stepping down to 10% and Jordan's Near East Investments exiting the project. Following the completion of the share transfers (which is subject to a number of conditions), APCO will be indirectly owned by Eesti Energia AS of Estonia (10%), YTL Power International Bhd of Malaysia (45%) and Yudean Group of China (45%). Earlier this year APCO signed agreements with Bank of China (BoC) and Industrial and Commercial Bank of China (ICBC) to provide debt funding for the project.  The USD 1.6 billion debt financing is expected to be provided on the basis of support by China Export & Credit Insurance Corporation (Sinosure).

  • (SeeNews Renewables, SofiA, 18 May 2016) The UK and Kenya governments on Tuesday signed a memorandum of understanding (MoU) to increase cooperation on renewable energy. As part of the agreement, UK Export Finance (UKEF), the UK’s export credit agency, is ready to consider requests for export financing or insurance for eligible renewable energy projects in Kenya, drawing on a risk appetite of up to at least GBP 250 million (USD 360m/EUR 319m).