(ShipInsight, Oslo, 2 July 2021) Oslo-headquartered Export Finance Norway (Eksfin.no), the result of a merger between former government agencies GIEK and Export Credit Norway, has opened its doors and is fully operational from 1 July 2021. The merger of the two predecessor agencies forms part of a larger redesign by the Ministry of Trade, Industry and Fisheries of the government apparatus around export promotion and export credit financing to make the system easier to navigate for end users.
Newsletter
Australian ECA gives 80X more to fossil fuel projects than renewables
(Guardian, Sydney, 6 July 2021) Australia’s export credit agency provided more than $1.5bn in finance to fossil fuel projects between 2009 and 2020, about 80X what it spent on renewables, according to a new report from Jubilee Australia. Over the same 11-year period, covering the hottest years on record globally, it provided $20m in support to renewables projects. Luke Fletcher, executive director of Jubilee Australia, argues that EFA’s support for fossil fuel projects “bucks the international trend”, risks investing in doomed projects and curtails opportunities for the country’s energy sector to modernise. Export Finance Australia has also been criticized for taking on a role as a Development Finance Institution (DFI), adding equity stakes in risky overseas infrastructure to its export insurance and lending powers in order to to compete with Chinese, Japanese and Korean ECAs. For some, this sort of reform blurs the distinction between the government and the private sector, and at worst is a form of corporate welfare, blurring the line between helping developing countries vs Australian business. Australia is the world’s largest exporter of coal and gas, yet producers in those sectors are finding it increasingly difficult to source financing from commercial lenders.
U.S. EXIM Bank says 2020 financing volume still far below global rivals
(Reuters, Washington, 30 June 2021) The Export-Import Bank of the United States said on Wednesday it remained far behind its global competitors in financing volume in 2020 even as overall financing activity fell due to the COVID-19 pandemic. In its annual competition report here to Congress, EXIM said it authorized $1.8 billion in official medium- and long-term export credit support during calendar 2020, compared with global leader China at $18 billion, France at $12.1 billion, Germany at $8.6 billion and South Korea at $5 billion. China, traditionally the largest provider of export credit, saw its financing volume decrease last year from over $33 billion in 2019.
EXIM support and the Pemex Ocean fire
(Climate Change News, Broadstairs, 14 July 2021) Campaigners have called on the US to review its longstanding support for Mexico’s state-owned oil and gas company after a gas leak from one of its pipelines set the ocean on fire in the Gulf of Mexico. The US export credit agency Exim bank has provided $16.14 billion in loans and guarantees to Pemex since 1998, with recent funds going to the site of the fire. For 76 years, the company has received billions of dollars in support from the US export credit agency, the Export–Import Bank (Exim), despite warnings of safety and environmental concerns.
U.S. Chamber of Commerce supports EXIM
(US Chamber of Commerce, Washington, 1 July 2021) In a letter to the Committee on Appropriations of the U.S. House of Representatives, the Chamber noted that overseas markets represent 95% of the world’s consumers and 80% of its purchasing power. Exports already support half of all manufacturing jobs, and one in three acres of American farms is planted for hungry consumers overseas. Approximately 300,000 small- and medium-sized businesses export, accounting for one-third of all merchandise exports. The International Affairs budget and the agencies it supports play a vital enabling role for U.S. companies to tap foreign markets and create jobs and prosperity at home. The Ex-Im bank provides vital financing and guarantees to help American businesses export. In the last pre-pandemic fiscal year when the Bank was fully functional (FY 2014), Ex-Im backed export sales that supported more than 164,000 American jobs. That same year, 90% of Ex-Im’s transactions — more than 3,340 — directly supported American small businesses. Far from being a burden on the taxpayer or a subsidy for corporations, Ex-Im charges fees for its services that has generated $7 billion in revenue for the U.S. Treasury over the past two decades beyond funds it received in appropriations. Failure to support Ex-Im would amount to unilateral disarmament in the face of other nations’ aggressive trade finance programs.
SACE helps revive Italian steelmaker Acciaierie d’Italia
(SteelOrbis, Brescia, 1 July 2021) Invitalia, the public shareholder, by entering the board, is expected to implement contractual commitments, in all a little over €2 billion – €400 million of capital increase – have already been paid, while about €700 million are missing in guarantees for a SACE [Italian export credit agency] loan, plus €900 million in reimbursements and support for variously assorted investments, Steel magnate ArcelorMittal has so far supported the company with a capital payment of €1.8 billion. Now it is up to the Italian State through Invitalia to do what was agreed, based on the contract that was signed in December 2020, stated Acceaierie CEO Lucia Morselli. She added “The market is favorable and the company is working hard. However, until August 2023 we must comply with environmental constraints that prevent us from accelerating production even more.”
Insurers mourn missed chance to form EU ECA
(Global Capital, London, 30 June 2021) Europe missed an opportunity to use the debate over the future of development finance to establish an insurance guarantee agency to attract private capital needed to help them hit targets for investment into emerging markets, according to experts in trade finance and insurance. Policymakers spent two years debating whether to use the EBRD or the European Investment Bank as a platform for a new single development bank before deciding to stick with the current set-up augmented by a more collaborative approach dubbed “Team Europe”. An EU development insurer could also use reinsurance to mobilise substantial amounts of non-development finance institutional capital from the private insurance market and from EU export credit agencies, Paul Mudde, former trade finance professional at ABN Amro and trade credit insurer Atradius, said. The problem, in his view, was that in the EU discussions about the European Financial Architecture for Development (EFAD) an insurance approach, like the World bank’s MIGA, had never been considered.
UKEF reports export credit arrangements for 2020
(Janes Defense, London, 23 June 2021) The UK’s export credit agency, UK Export Financing (UKEF), revealed in its annual report on 22 June that it had underwritten a record GBP12.3 billion (USD17.1 billion) for UK industry during the 2020/21 financial year. Key transactions in the annual report included the beginning of the drawing of GBP1.13 billion to BAE Systems in support of the manufacture of Eurofighter Typhoon and BAE Systems Hawk trainer aircraft to Qatar. In addition, buyer credit guarantees for Indonesia were supplied for the acquisition of Lockheed Martin C-130J Hercules medium transport aircraft (maximum liability of GBP74.6 million) and air-defence systems from Thales UK (maximum liability of GBP29.8 million).
ECA Climate change goals lacking on maritime shipping decarbonization
(S&P Globlal, New Yrk, 3 June 2021) The difficult-to-decarbonize maritime shipping sector was not part of the Paris agreement, and is projected to account for an increasing portion of global CO2 emissions. The international cargo and container shipping industry plays a central role in global supply chains, but until recently has made few inroads toward decarbonization. That needs to change if the world is going to achieve net zero emissions by 2050. An inaugural report released late last year showed that ECA shipping portfolios aligned with the climate goals set by the IMO at only three of 15 disclosing institutions: Dutch bank ING Groep NV, French export credit agency Bpifrance Assurance Export, and Eksportkreditt Norge AS, also known as Export Credit Norway. But even as it pursues deep decarbonization pathways, the maritime shipping industry is taking up interim solutions. For starters, some shippers have begun using liquified natural gas as a shipping fuel, which produces significantly less carbon than the oil the industry uses. But since natural gas is not viewed as a permanent solution because it still emits carbon, the industry is pursuing zero-carbon options as well. The Getting to Zero Coalition coordinated by the Global Maritime Forum. The coalition recently released a report that found getting past the tipping point for zero-emissions fuel costs will require the industry to have 5% adoption of those fuels by 2030, with adoption ramping up to more than 90% by the mid-2040s.
World’s largest oil shale power plant in Jordan near completion with Sinosure support
(Zawya, Dubai, 1 June 2021) The Attarat project will generate 3.7bln kWh of electricity, which can meet nearly one-fifth of Jordan’s power demand. The first unit of the world’s largest oil shale power plant, located at Attarat um Ghudran, Jordan, is now online, the project’s Chinese contractor tweeted last week. The post also said the project is the largest 100% Chinese financed private infrastructure project outside China under the Belt and Road Initiative (BRI). In March 2017, Reuters had reported that the project had secured debt financing from a consortium of Chinese banks. In the same month, JV partner Enefit said in a statement that the project is the first oil shale-fired power plant and mine in the world financed using limited recourse debt financing, securing $1.6 billion for 15 years, backed by export credit insurance from Sinosure.
