(City A.M., London, 20 January 2023) (UK Export Finance has agreed a post-Brexit deal with one of Egypt’s biggest construction and engineering firms, Hassan Allam Holding, to increase cooperation across Africa. Hassan Allam has a vast a portfolio of projects ranging from solar power and water to petrochemicals facilities, museums, airports, and thousands of kilometres of roads and bridges. UKEF has up to £2bn available to support projects in Egypt, as Britain looks to spread its wings after leaving the European Union and trade globally.
Newsletter
GE secures €1bn agreement with Polish ECA
(Power Engineering International, Maarssen, 20 January 2023) GE and KUKE, Poland’s Export Credit Agency (ECA), have confirmed a €1 billion ($1.1 billion) export finance co-operation agreement which will help facilitate capital investment, and enable a mix of renewable and gas power projects globally through Polish exports and supply chain. Under the agreement, GE will be the second global organisation to use KUKE’s financial instrument from its new export support programme. KUKE’s financing solutions from the programme serve to encourage industry players to invest, manufacture and export technology around the globe, including new markets, while supporting local supply chains in Poland.
India extends aid worth USD 3.9 billion to help Sri Lanka face economic crisis
(Asia News Initiative, New Delhi, 14 January 2023) India’s EXIM bank and State bank of India extended export credit facilities worth USD 1,500 million to Sri Lanka for the import of essential commodities. India has extended aid worth USD 3.9 billion to help Sri Lanka sustain itself in face of the acute economic and financial crisis and meet its immediate needs such as medicines, cooking gas, oil and food items, Sri Lanka based news publication News 19 reported. In February 2022, India signed an agreement for the supply of petroleum products worth USD 500 million from the Indian Oil Company through a credit line in order to help Sri Lanka overcome its fuel shortage. This was expanded by an additional USD 200 million worth of petroleum products in April 2022.
Court finds UKEF’s $1.15 bln funding for Mozambique LNG project lawful
(Offshore Energy, Schiedam, 13 January 2023) A London court has ruled that the UK government’s funding of up to $1.15 billion of financing for the Mozambique LNG project led by French energy major TotalEnergies is lawful. According to reports by Reuters, the decision by London’s Court of Appeal dismissed an appeal by the environmental group Friends of the Earth. The group argued that financing for the project was permitted after it was incorrectly judged to be compatible with the Paris Agreement and its goal to limit global warming to 1.5 degrees. The total emissions for the new gas field, which research by the environmental group finds would total some 4.5 billion tonnes of greenhouse gases (GHG) over its lifetime – more than the combined annual emissions of all 27 EU countries, were not calculated as part of the government’s approval process or evaluated against global climate goals, the environmentalists warned. At the time of filing the legal challenge, Leigh Day solicitor Rowan Smith, who represented Friends of the Earth, noted that the Court of Appeal’s answer is likely to be a “defining moment in climate change litigation”.
Public Financing as a Critical Path Forward to a Just Energy Transition in Africa
(Engineering News, Johannesburg 12 January 2023) The path to decarbonizing the energy sector is not a “one-size-fits-all” between developed and developing markets. Given the historical strain between developed economies (which modernized with fossil fuels) and developing economies (now being asked to forgo this route), it is evident that sustainable, long-term global cooperation and energy security will be required to address the need for Africans to have access to sustainable, reliable, and affordable energy. If we truly want to increase electrification in developing countries in Africa and help provide reliable, affordable, and sustainable energy, policy makers and financial institutions must partner with project sponsors to tailor capital solutions that best fit the region and its countries. ECAs and DFIs along with commercial banks and other multilaterals play a critical role in enabling access to the capital required to deliver a more just and equitable energy transition today and for future generations. In a recent opinion piece, Jonathan Bell, Editor in Chief of TFX News asks “When will sub-Saharan Africa be able to properly see the light?’ and addresses “the jokers that think such countries ought to be moving straight to renewables – they need to ask how could they pay for such projects, and how could any related debt be repaid?” With respect to the Friends of the Earth opposition to the Mozambique LNG project he argues that “some of [those] volumes to be exported were destined to be used in power generation to replace coal and oil generators – a move which would lower carbon emissions globally.” [What’s New Editorial comment: Given that northern industrial development was largely financed on the backs of African slaves, one could also ask why we must hold back on tightening our own belts and coming up with the admittedly huge means to pay for their carbon free investments, in reparation for what we got from Africa, instead of begging for the delay of a long overdue “just” transition to keep ourselves warm.]
Uganda cancels $2.2bn Chinese rail contract, signs with Turkey
(The East African, Nairobi, 12 January 2023) After eight years of non-execution, the Uganda government has terminated the contract of China Harbour Engineering Company (CHEC) to build the country’s first phase of standard gauge railway (SGR), a 273km line from Malaba to Kampala. Kampala says the financing model for the project will also change, with Yapi Merkezi, which is building Tanzania’s SGR, expected to tap into its network to bring Export Credit Agencies (ECAs) on board that will finance and breathe life into the moribund project. The line, starting from the Malaba border post between Uganda and Kenya, was expected to cost $2.2 billion, but the Chinese financiers did not fund the project after casting doubt on Kenya’s SGR reaching the border to link with Uganda’s and making the project viable.
Chinese export insurer scales up support for foreign trade
(Xinhua, Beijing, 14 January 2023) SINOSURE stepped up efforts to boost the country’s foreign trade in 2022, data from the company showed on Saturday. The insurer handled underwriting totaling 899.58 billion U.S. dollars for insured businesses throughout the year, serving over 170,000 clients, it said. Of the total, 745.16 billion dollars was short-term export credit insurance, up 10.2 percent year on year. The underwriting for small and medium-sized enterprises amounted to 226.78 billion dollars, a 15.7 percent increase from a year earlier… The company added that it also increased insurance support to stabilize industrial and supply chains, nurture new business models, and boost services exports. SINOSURE is a state-funded and policy-oriented insurance company that promotes China’s foreign economic and trade development and cooperation. It was officially launched and put into operation in 2001, and its service network now covers the whole country.
Mexico Expects State Oil Giant Pemex to Pay Its Debt Without Government Help
(Yahoo News, Mexico, 3 January 2023) Mexico’s Finance Ministry expects Petroleos Mexicanos to pay debt coming due in the first quarter without government help. Refinancing debt could include but won’t be limited to bank loans, bond issuance, direct financing or financing guaranteed by export credit agencies. After providing the oil company with financial support in recent years, the Finance Ministry now wants Pemex to foot the bill itself unless it doesn’t have enough cash to do so by the end of the quarter… Pemex is the world’s most indebted oil major, with financial obligations of $105 billion by September 2022. It is under enormous financial strain as the Mexican government wants it to halt oil exports and invest in loss-making refineries — all of which while the company fails to stem long-term production declines. Mexico’s oil driller has 188 billion pesos in amortizations due in 2023 and must maintain zero net indebtedness in real terms, it said in its annual financing plan.
Comparing Government Financing of Reactor Exports
(Columbia University, New York, 25 August 2022) This report, part of wider work on nuclear energy at Columbia University’s Center on Global Energy Policy, compares the financing terms offered between 2000 and 2021 by the world’s major exporters of nuclear power plants: Russia, France, the Republic of Korea (ROK), China, and the United States. Decarbonizing the world’s energy supply by 2050 will require financing low-carbon energy projects at a cost of upwards of trillions of dollars. Nuclear energy is one of the few dispatchable low-carbon energy resources, and studies by the International Energy Agency have estimated a possible doubling of nuclear power as part of scenarios for achieving net-zero greenhouse gas emissions by midcentury. Large, capital-intensive projects such as nuclear power plants can be challenging for some countries to finance, however. As a result, countries wishing to build nuclear reactors look for attractive financing from supplier nations in the form of loans and equity.
Saudi and Italian ECAs sign MoU to enhance trade cooperation
(Arabian Business, Abu Dhabi, 27 January 2023) The agreement envisages establishing a framework for mutual reinsurance to enhance the presence of Saudi exports in Italian markets. Saudi Export-Import Bank CEO Saad bin Abdul Aziz Alkhalb hailed the agreement as a step forward in the bank’s efforts to improve and diversify Saudi non-oil exports and enhance their competitiveness, in addition to providing funding for Saudi exports and insurance services and export credit insurance with competitive advantages in line with the targets of the Kingdom’s Vision 2030 to increase the value of non-oil exports from 16 percent to 50 percent of the non-oil GDP.
