What's New for January 2024

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

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  • Biden Administration Faces Pushback on Another Gas Project, This Time Overseas
  • JBIC financing for two gas power projects in Mexico would violate the G7 agreement
  • Amid Corruption Charges, Groups Demand EXIM Halt Payments to Trafigur
  • ECAs support €1.08 billion green loans for Cadeler
  • UKEF underwrites financing for another section of Turkish high speed rail network
  • Red Sea crisis: Indian shipping costs and times and export credit premiums up
  • Brodies Guides On War Risk Insurance For Ukrainian Exports
  • H2 Green Steel Boden: Complex financing includes Euler Hermes
  • Swedish “Green” Steel Plant Secures $7 Billion in Financing
  • Northvolt gets $5bn green loan for European EV push
  • Petroperú Desperate for Cash Loses $500M SACE Loan Guarantee
  • How to Deal with Sinosure as an Importer
  • European Union readies €300mn ECA pilot
  • UKEF: Taxpayers underwrite French contractor’s Saudi project
  • African tri-nation transport project to start Phase II
  • Belgian ECA Credendo helps expansion of Montevideo Port to Boost Uruguay's Foreign Trade
  • FLASH: US Exim readies for US$2bn domestic financing boom

Biden Administration Faces Pushback on Another Gas Project, This Time Overseas

(New York Times, New York, 26 January 2024) Even as the Biden administration, under pressure from environmentalists, hits pause on its approval of a major natural gas export terminal in the United States, it faces another big gas decision overseas. A $13 billion natural gas export project in Papua New Guinea led by TotalEnergies and Exxon Mobil is on a shortlist of projects set to receive financing from the U.S. Export-Import Bank, or Ex-Im, which supports American businesses around the world.The Papua LNG gas project would join a portfolio of oil and gas projects the bank funds, including an oil refinery in Indonesia and an oil tank project in the Bahamas. The bank is also considering financing an offshore pipeline and natural gas plants in Guyana. Some climate activists see a big contradiction between climate actions the government is taking in the United States versus around the world. “He’s done so much at home,” said Friends of the Earth's Kate DeAngeli, but he “can’t claim to be a climate champion when the U.S. is propping up this fossil fuel infrastructure all over the world.”


JBIC financing for two gas power projects in Mexico would violate the G7 agreement

(JACSES, Tokyo, 30 January 2024) The Japan Center for a Sustainable Environment and Society notes that two gas-fired combined cycle power projects in Mexico are now under consideration for financing by the Japan Bank for International Cooperation (JBIC). One is in San Luis Potosi and the other one in Salamanca. When Japanese NGOs asked the consistency of these two projects with the agreement reached at G7 Elmau Summit to end new public financing for fossil fuel energy, JBIC did not provide specific rationale on its judgment that the policy of the Mexican government is consistent with the 1.5 degree target. If JBIC provides support, it is highly likely that it constitutes a violation of the G7 agreement, thus JBIC should stop consideration for financing. JBIC placed these two projects on its list of projects under consideration for financing on November 2, 2023.


Amid Corruption Charges, Groups Demand EXIM Halt Payments to Trafigura

(Friends of the Earth, Washington, 23 January 2024) Civil society and environmental groups today requested that the US Export-Import Bank withdraw funding from the Trafigura Group, a major global commodity trader. In December, Bloomberg reported that Trafigura was charged with corruption and bribing elected officials in Angola. In an open letter to EXIM, asking the bank to halt its payment of $400 million to Trafigura, a financing agreement that was approved in July 2023. This letter questions EXIM’s due process in analyzing funding recipients and its method of reconsideration when corruption is revealed. This comes on the heels of both the United States and Swiss governments launching investigations into the company’s affairs. Despite this, EXIM last year gave Trafigura the massive financing of $400 million to purchase liquefied natural gas, a decision the groups charge was made based on flawed environmental damage assessments. EXIM is soon expected to approve $660 million for the Gas to Energy Project in Guyana, despite similar concerns from activists. In 2023 the institution funded nearly $1 billion for overseas oil and gas development, violating President Biden’s 2021 Executive Order.


ECAs support €1.08 billion green loans for Cadeler

(The Asset, Hong Kong, 3 January 2024) Oslo-listed offshore wind turbine installation company Cadeler has raised €1.075 billion (US$1.19 billion) via two syndicated green financing facilities with backing from export credit agencies (ECAs). The revolving facilities will be used to refinance Cadeler and Eneti’s existing debt, as well as finance merger-related costs. Ancillary lines have been set up to support the project-related letter of credit (LC) needs of the company, and term facilities will finance the upgrade of cranes on two of Cadeler’s O-Class offshore installation vessels. The financing for the crane upgrades has ECA backing from the Export and Investment Fund of Denmark (Eifo). A facility amounting to €425 million, which is backed by the China Export & Credit Insurance Corporation (Sinosure), will be used to finance the acquisition of two new X-Class wind turbine installation vessels currently under construction in China.


UKEF underwrites financing for another section of Turkish high speed rail network

(Railway Gazette, Sutton, 22 January 2024) The UK government’s export credit agency UKEF has agreed to underwrite a €1·03bn loan arranged by Mitsubishi UFJ Financial Group for three Turkish companies to construct Turkey’s 140 km long Yerköy – Kayseri route modernisation scheme. UKEF has partnered with export credit agencies from Italy (SACE), which reinsured €249m of the guarantee, Poland’s KUKE, which reinsured €205m, and Austria’s OeKB (€176m). A separate €220m commercial loan from the Islamic Corporation for the Insurance of Investment & Export Credit makes the total financing package worth €1·2bn. [This is the third Turkish high-speed railway to be backed by UK Export Finance and its counterparts in Italy, Poland, and Austria. Combined, the projects amount to some 900km of rail. The two others are the Ankara-Izmir and the Mersin-Gaziantep lines.]


Red Sea crisis: Indian shipping costs and times and export credit premiums up

(Financial Express, Noida, 18 January 2024) An Indian inter-ministerial meeting on Red Sea crisis on Wednesday has asked the Department of Financial Services (DFS) in the finance ministry to monitor the credit requirements of exporters and ensure that credit flows to them are maintained, a senior official said Wednesday. Different reports have said the conflict in the Red Sea is leading to increased shipping costs by 40-60%, insurance premiums by 15-20% and delays of up to 20 days due to rerouting of some ships away from Suez Canal. The cost and turnaround time of shipments have increased as two shipping lines including Maersk have stopped services but volume is not affected, the official said.He said so far there has just been time and cost impact, nothing else. In the rapidly escalating situation in the region the shipping rates on some routes have gone up by six times. Exporters fear that the impact could come in a big way if the situation does not normalise. The government may have to look at alternate routes. On its part the ministry of commerce has asked Export Credit Guarantee Corporation (ECGC) not to increase the premium on credit insurance and other related services.The insurance covers enable the banks to extend timely and adequate export credit facilities to the exporters. [Around 80% of India’s merchandise trade with Europe passes through the Red Sea and substantial trade with the US also takes this route. Both geographies account for 34% of India’s total exports. The Red Sea strait is vital for 30% of global container traffic and 12% of world trade.]


Brodies Guides On War Risk Insurance For Ukrainian Exports

(USA Herald, New York, 12 January 2024) In a groundbreaking move, Scottish law firm Brodies LLP has steered Ukraine’s Export Credit Agency through uncharted territory, unveiling a novel war risk insurance process to safeguard shipowners and vessel charterers amidst the ongoing conflict with Russia. In a daring legal maneuver, Brodies LLP has strategically advised Ukraine’s Export Credit Agency, paving the way for a groundbreaking war risk insurance process. The initiative aims to fortify shipowners and vessel charterers, allowing uninterrupted goods shipments across the tumultuous Black Sea during the persisting conflict with Russia. Brodies unveiled the revolutionary insurance arrangement, orchestrating a financial ballet that channels funds to accounts at two Ukrainian state banks, Ukrgasbank and Ukreximbank. These financial powerhouses are then empowered to issue irrevocable letters of credit, each confirmed and guaranteed by Germany’s DZ Bank AG.


H2 Green Steel Boden: Complex financing includes Euler Hermes

(TXF News, London, 23 January) H2 Green Steel (H2GS) – the world’s second green hydrogen mega project – has taken a similar approach to Neom for its hydrogen-powered steel manufacturing project in Boden, Sweden. The simple math – 1% overall cost increase for 40% emissions decrease on the final manufactured product – has enabled H2GS to get a long list of very solid credits signed up to term sheets or steel supply agreements. The multi-sourced debt facilities backing the €6 billion-plus project was signed on 21 December 2023 and are expected to reach financial close in Q1. The overall financing for H2GS comprises €4.15 billion of senior and junior debt... and debt facilities for the project comprised of two €1.2 billion 12.75-year tranches with 95% and 80% cover provided by Euler Hermes and Riksgalden (Swedish National debt Office) respectively, a €200 million 12.75-year direct loan from the EIB, a €250 million 12.75-year term loan, a €300 million 12.75-year revolving credit and a €400 million 12.75-year contingency tranche.


Swedish “Green” Steel Plant Secures $7 Billion in Financing

(Thomasnet, New York, 29 January 2024) The developer of the world’s first large-scale plant that will manufacture “green” steel has now secured some $7 billion in financing for the project to date, company officials announced. More than 20 lenders signed onto the debt financing, including the European Investment Bank, the Swedish Export Credit Corp., and numerous commercial banks. The new equity funding, meanwhile, came from the Microsoft Climate Innovation Fund and Siemens Financial Services, among others. H2 Green Steel recently disclosed new debt financing agreements worth $4.6 billion and said that its equity funding had increased by $325 million — up to $2.3 billion. It has also received a grant from a European Union energy innovation initiative worth about $270 million. H2, founded in Stockholm in 2020, aims to replace the use of fossil fuels in heavy industry with hydrogen fuel produced with renewable electricity, thereby slashing greenhouse gas emissions. The company says its steelmaking process reduces carbon dioxide emissions by up to 95% compared to conventional steel production, which uses blast furnaces fired by coke, a coal-based fuel.


Northvolt gets $5bn green loan for European EV push

Northvolt AB, the Swedish battery maker that counts BMW, Volvo Car and Volkswagen among its clients, has secured a $5 billion (€4.59 billion) green loan to bolster production and expand recycling efforts. The package backed by the Luxembourg-based European Investment Bank is among the largest green loans on record. Northvolt is central for European efforts to establish an electric-vehicle supply chain that can rival Asia and the US. The company plans to use the money to expand production at its main Swedish factory in Skelleftea and grow an adjacent recycling plant. It’s funding is guaranteed by export credit agencies and provided by 23 commercial banks in addition to the Nordic Investment Bank and the European Investment Bank, which is lending slightly over $1 billion (€942.6 million). A significant portion of the loan is covered with certain guarantees combined with direct funding from the Swedish National Debt Office, Euler Hermes, the Export-Import Bank of Korea, Japan’s Nippon Export and Investment Insurance, or NEXI, and the Korea Trade Insurance Corporation.


Petroperú Desperate for Cash Loses $500M SACE Loan Guarantee

(Amazon Watch, Oakland, 25 January 2024) In 2023, the Peruvian state-owned oil company, Petroperú, faced one of its worst financial crises, due to its accumulation of up to $6.5 billion in debt for its Talara Refinery Project, which will likely serve as a major driver of oil exploration and exploitation in Indigenous territories of the Amazon and in ancestral fishing grounds in the north Peruvian coast. Due to successful community opposition against oil activities, Petroperú was unable to secure a $500 million loan guarantee in 2023 from Italy’s export credit agency (SACE) partly due to intense scrutiny from Indigenous nations and strong backlash against Petroperú in Italy. The world’s largest fossil fuel financiers, Citigroup and JPMorgan Chase, are considering supporting the company again by arranging or underwriting Petroperú’s $1 billion bond issuance. This is despite ongoing demands by a united front of multiple Indigenous nations of the Peruvian Amazon for international financiers to halt new financing for Petroperú.


How to Deal with Sinosure as an Importer

(Global Trading Magazine, Dallas, 8 January 2024) An in-depth guide on handling the Sinosure export credit insurance services and getting deferred payments for your imports from Chinese suppliers. Payment terms in contracts with Chinese suppliers can require as much as 30% of the total up front as a hedge against the importer’s nonpayment, also known as its credit risk. The remainder of the payment is usually due before the Chinese exporter ships the goods. Sinosure, the China Export & Credit Insurance Corporation, is an official financial institution designed to help in cases like that. It provides export credit insurance to companies in China seeking to do business with foreign buyers without having to bear the risk of nonpayment. While Sinosure’s clients are the exporting Chinese companies, its business benefits importers outside of China by eliminating cash flow issues and extended delivery times. With this insurance safeguard, suppliers are more willing to extend deferred payment terms and trade turnover with their foreign partners, to the mutual benefit of both parties. In the year 2022, Sinosure ensured export credit worth more than $700 billion for approximately 240,000 Chinese exporters. This compares with only $2.61 billion insured that year by US Exim. Sinosure insures so much more because it is a key part of the country’s export drive, and it maintains a large sales and customer service network throughout China, whereas US Exim generally focuses on a few large-scale industries like airplanes, power generation, and infrastructure.


European Union readies €300mn ECA pilot

(Global Trade Review, London, 17 January 2024) The European Union is advancing plans to launch its inaugural risk-sharing instrument for the export credit sector, with a pilot initiative aimed at boosting SME exports to war-torn Ukraine. The European Commission is developing the scheme alongside the EU’s SME financing arm, the European Investment Fund (EIF), which is expected to guarantee export credit deals involving Ukrainian buyers. It will be the first EU-level risk-sharing instrument provided to the export credit sector, the European Commission says, and highlights how Brussels is increasingly seeking to wield the might of export credit agencies (ECAs) from its 27-member states to advance policy goals, such as green energy, overseas investment and competing with China and the US. Austria’s ECA OeKB, Finnvera, the European Investment Fund, Atradius DSB, Denmark's EIFO and Poland’s ECA Kuke are studying participation.


UKEF: Taxpayers underwrite French contractor’s Saudi project

(Construction Index, London, 5 January 2024) The UK’s export credit agency has guaranteed an Islamic Murabaha financing facility for the development of Six Flags Qiddiya City near Riyadh. UK Export Finance (UKEF) has guaranteed an Islamic Murabaha financing facility for £550m signed by Qiddiya Investment Company to finance the construction of the theme park. This is being undertaken by a joint venture led by Bouygues Bâtiment International of France and local firm Almabani General Contractors. UK Export Finance chief executive Tim Reid said: “Saudi Arabia’s ‘Vision 2030’ is hugely ambitious, and UKEF is determined to ensure that British businesses can benefit from the enormous exporting opportunities it offers.


African tri-nation transport project to start Phase II

(Southern Africa Freight News, Johannesburg, 15 January) The African Development Bank-financed Tanzania-Burundi-DR Congo Standard Gauge Railway (SGR) Project has commenced to Phase 2. The bank's financing is intended to construct 651 kilometres on the Tanzania-Burundi railway line. The bank will provide $98.62 million to Burundi in the form of grants and $597.79m to Tanzania in loans and guarantees. As the Initial Mandate Lead Arranger, the bank will structure and mobilise financing of up to $3.2 billion from commercial banks, development financial institutions, export credit agencies and institutional investors. The total cost of the project both in Tanzania and Burundi is estimated at nearly $3.93bn. The construction of this railway will allow Burundi to intensify the exploitation of nickel, of which the country has the tenth-largest deposit in the world in the Musongati mining fields. The country also has resources such as lithium and cobalt,


Belgian ECA Credendo helps expansion of Montevideo Port to Boost Uruguay's Foreign Trade

(BNAmericas, Santiago, 10 January 2024) IDB Invest will provide $103 million in financing to Terminal Cuenca del Plata S.A. (TCP), including the mobilization of resources for $46 million from Banco Bilbao Vizcaya Argentaria S.A. (BBVA) for the design, construction and operation of the expansion of the Port of Montevideo. Additionally, IDB Invest financing will be complemented by a financing facility given to commercial banks by Belgium's export credit agency, Credendo, for a total amount of approximately $340 million.


FLASH: US Exim readies for US$2bn domestic financing boom

(Global Trade Review, 31 January 2024) The Export-Import Bank of the United States (US Exim) is anticipating a “significant” rise in domestic financing activity in the coming year as it works to rejig its offering and grow investment in key sectors such as semiconductors, critical minerals and renewable energy.  US Exim first launched the Make More in America (MMIA) programme nearly two years ago, following a 100-day review of critical supply chains.  Deals to-date for some $350m are dwarfed by the financing extended by rival export credit agencies under their equivalent programmes, such as the UK’s, which since releasing its export development guarantee in 2020 has rolled out billions of dollars in support to large corporates such as Ford and Jaguar Land Rover.  “The MMIA initiative is going to be a boon for American manufacturers and American manufacturing. We have US$2bn in the pipeline,” said US Exim’s first vice-president and vice-chair of its board, Judith Pryor, while noting deals are split across a range of industries, such as energy efficiency, battery storage, satellites and critical minerals.