(Reuters, Paris, 5 November 2019) France is considering halting funding guarantees for energy projects abroad that involve fracking or flaring, according to a finance ministry report. The government aims to make its program of state guarantees for export financing more environmentally friendly and is dropping support for coal projects as a first step. Next year it will also look into stopping export guarantees for oil and gas activities that are banned in France, including fracking and gas flaring, the report submitted to lawmakers states. In the medium term, a ban on state guarantees for developing new foreign oil fields might also be considered.
Index for November 2019
Volume 18, Issue 11
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(Sum Of Us, Paris, 7 November 2019) - A report published today by L'Observatoire des armements and SumOfUs in collaboration with Les Amis de la Terre France, documents the militarisation of Total's activities in Yemen since the 1980s. Open sources and witness testimony reveal that Total’s gas liquefaction site at Balhaf has been set up as a military base (since 2009) and a secret prison (2017-2018). The report also questions the role of the French government, which was involved in the militarisation of the site, and is the guarantor of Total’s Yemen LNG gas liquefaction project. French export subsidies are currently being discussed in the Assemblée nationale as part of the 2020 Finance Bill. Le Monde reports that Total has received official French export credit guarantees totaling 216 million Euros. Le Monde has drawn information from testimonies collected by Amnesty International, as well as a group of UN experts on Yemen, as well as non-governmental organizations and Yemeni activists who confirmed the existence of the prison inside a military base set up by the UAE in the same place. These reports draw on several accounts of arbitrary detention and inhuman and degrading treatment – such as torture and denial of medical care – by Emirati soldiers.
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(Both Ends, Amsterdam, 17 November 2019) This report shows that the Dutch Export Credit Agency ADSB insured fossil fuel-related projects with a total insured value of € 10.8 billion in the period 2012-2018. This is more than 60% of its total insured value for that period and € 1.5 billion a year on average. The policy incoherence thus created by the Dutch government nullifies the Dutch contributions to international climate ambitions. The Dutch government indicates that it will end all financial support to coal projects and exploration and development of new oil and gas fields abroad from its foreign trade and development cooperation instruments as of 2020. Unfortunately, this commitment is not applied to the export credit facility, which supports the by far largest volume of fossil fuel related business transactions abroad. By not applying the same principles to its public export credit support, the Dutch government undermines its own foreign climate ambitions. This report calls upon the Dutch government to align the policies of its Export Credit Agency with the Paris climate goals. Furhtermore, it provides suggestions for possible ways to go about it.
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(Bank Track, Nijmegen, 26 November 26, 2019) Ahead of the November 27 auctioning of exploration licenses for 14 onshore and offshore oil and gas blocks in the Dominican Republic, environmental groups warned financiers not to back companies which may end up being awarded licenses. Dominican NGO CNLCC, Italy's Re:Common and BankTrack have raised concerns over the major climate risks and adverse environmental and social impacts which would result from the opening up of fossil fuel blocks in the country’s Cibao, Enriquillo, Azua, and San Pedro basins which together cover more than 20 percent of Dominican territory. A major corruption scandal has plagued the Dominican Republic involving the Brazilian construction company Odebrecht, which received the Punta Catalina coal-fired power plant contract due to an opaque, allegedly criminal tendering process. European banks were compelled in 2018 to freeze their project finance disbursements.
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(Hydrocarbons Technology, London, 27 November 2019) The African Development Bank (AfDB) has approved a $400m loan to support construction of the integrated liquefied natural gas (LNG) plant and liquefaction facility in Mozambique. The Mozambique LNG Area 1 Project is led by the French corporation Total. Other partners in the project are Mitsui, Oil India, ONGC Videsh, Bharat Petroleum, PTT Exploration, and Mozambique’s national oil and gas company ENH. NGOs have provided overwhelming evidence that Mozambique's LNG projects will emit at least 5.2 million tons of carbon dioxide per year, causing climate chaos,
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(European Council, Brussels, 28 November 2019) The Finnish Presidency of the European Council is hosting a conference on 2 December on business and human rights. The agenda includes a panel on "Promoting Human Rights Due Diligence through State Financing", noting that "A critical way for states to incentivise businesses to respect human rights is through the provision of public financing for private sector investments abroad through development finance, export credit and other forms of support. This discussion will explore the importance of leadership by individual state-based financial institutions and by government in this area.
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(Bahamas Tribune, Nassau, 12 November 2019) The Dutch company that supplied nine Royal Bahamas Defence Force vessels, Damen Shipyard Group, misrepresented to the Dutch government how much it paid a foreign intermediary that worked on the project. The World Bank disbarred Damen for 18 months in 2016 for failing to disclose an agent and the amount of commissions due to the agent. The Dutch government then temporarily suspended Damen from accessing its export credit insurance. Dutch Secretary of Finance Wopke Hoekstra said ADSB subsequently conducted an investigation and found 14 cases where Damen gave “insufficient or incorrect information in respect of paid agency commissions.” Damen’s project with The Bahamas was one of these cases. Dutch investigators believe Damen paid 12 percent of its contract with the Bahamian government to NSG Management & Technical Services Ltd as commissions. It is not clear what NSG’s work on the project involved. Dutch investigators are said to be examining whether Damen allegedly bribed foreign officials in multiple jurisdictions through their foreign agents. NSG is said to be at the centre of its inquiry.
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(Fox News, Washington, 22 October 2019) Republican commentator Newt Gingrich in a Fox News opinion article argues that "In the age of Huawei, the Belt and Road Initiative (BRI), and China’s state-sponsored companies, we need the United States Export-Import Bank more than ever. This is a big deal. According to Ex-Im Bank reports, the BRI system includes about 30 percent of the world’s gross domestic product and impacts more than 66 percent of the world’s population. China’s Export-Import Bank alone has participated in more than 1,800 projects with a loan value in excess of $149 billion. If China links the economic might of the BRI with its military (the Communist Party-controlled People’s Liberation Army boasts 2 million troops) U.S. national security would be seriously threatened. According to Chinese Defense Minister Wei Fenghe, the country’s Belt and Road Initiative (BRI) is absolutely a part of its military plans. One way that the Chinese Communist Party imposes its will through the BRI is through so-called debt-trap diplomacy. Compared to the United States, China is spending more, gaining more influence, and more quickly improving its economic and military positions across the globe. Clearly, the Chinese Communist Party is eroding U.S. economic influence abroad. The Ex-Im is one of our best tools to prevent this and keep America strong. Congress should reauthorize the Ex-Im bank, so we can compete against the Chinese Communist Party’s economic strategy of world domination."
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(Nairametrisc, Lagos, 2 November 2019) Recent reports are that the completion of Nigeria's long-abandoned Ajaokuta Steel Complex would be funded by the Russia's MetProm Group with funding from the Russian Export Centre. Nairametrics understands that although massive plants and other gigantic equipment in the complex were idle and most had been overgrown with weeds, most of the facilities were still functional, and as such over the years, the problems facing the company had not prevented the workers from receiving salaries. The Ajaokuta Steel Complex was originally built by another Russian firm, TyazhPromExport (TPE), but in 2016 the Federal Government decided to jettison TPE because the company did not want to complete the steel mill. A rail line and functional seaport are still needed to ease the operation of the steel mill.
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(Daily Nation, Nairobi, 31 October 2019) In its Kenya Economic Update for October 2019, to be released today, the World Bank notes that, “with 43% of domestic debt expected to mature within a year, the government could face challenges in rolling over such bonds in an environment of no interest rate caps, low subscription rates and over-exposure of commercial banks to these assets”. Signs of distress in paying debt came to the surface last month after it emerged that Kenya had defaulted on a Sh500 million (US$4.9m) debt owed to a Belgian export credit company for the construction of a water supply system in Mavoko. Credendo Export Credit Agency, an export credit agency of the Kingdom of Belgium, had written to the Treasury demanding the payment by November 1, accusing the government of failing to pay despite repeated reminders. As at 30th September 2019, the Star reported that most of Kenya’s bilateral debt is on concessional terms with no interest chargeable on Sh4.2 billion and an interest rate of just 2.08 per cent on Sh660.5 billion from Exim Bank of China (which constituted 74 per cent of total bilateral debt and got the relic like railway trains chugging along).
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(Greek City Times, Sydney, 27 November 2019) The European Commission on Tuesday announced its decision to return Greece to the list of “marketable risk” countries for short-term export credit insurance, following the successful completion of its fiscal adjustment program in August 2018 and the continuing implementation of reforms. The European Commission said its decision will be activated on January 1, 2020, and will mean that “short-term export credit risks towards Greece will be considered as marketable to be covered by private insurers.”
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(Renewables Now, Fresno, 5 November 2019) The UK’s export credit agency, UK Export Finance (UKEF), will provide a TWD-9.2-billion (US$303m/EUR 272m) project finance guarantee to support the construction of the 376-MW Formosa II offshore wind project in Taiwanese waters. UK companies will be involved in constucting the Formosa 2 offshore windfarm, helping to unlock the export potential of this growing sector of the UK economy.
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Politico, Washington, 5 November 2019) EXIM has signed an agreement with Japan’s export credit agency, NEXI, that allows either agency to act as the lead on co-financing projects. Under the previous co-financing agreement, only Ex-Im could act as the lead. The expanded scope is expected to facilitate greater business opportunities for exporters of both nations, Ex-Im said. The new arrangement makes it “possible for Japanese companies to collaborate with American companies in infrastructure projects” in the Indo-Pacific region, NEXI Chairman and CEO Atsuo Kuroda said in a statement.
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(Corporate Jet Investor, London, 21 November 2019) A judge in the UK courts has ruled that the sale of Global 6000 ZS-OAK can now go ahead, after Export Development Canada (EDC) settled its litigation with Westdawn Investments. Westdawn Investments is a South African company that is owned by the Gupta family, the wealthy Indian-born South African family with interests in computing, media, and mining and whose members who are under investigation for misappropriation of large amounts of state assets have fled the country. They have refused to return to face court hearings and to participate in criminal investigations. According to EDC, it ended its business relationship with Westdawn Investments in December 2017, after Westdawn Investments defaulted on its loan in October 2017. EDC’s statement notes that in the months and years following its decision to provide Westdawn Investments with the loan, allegations that the Gupta family had been involved in corruption and political interference in South Africa arose.