Egypt: New refinery closes in on $2.3bn debt package
A GRASS-roots Egyptian refining project has accumulated $2.3bn in debt financing from a consortium led by Asian lenders
At a time when the European and US refining industries are struggling (PE 4/10 p2), a group of international export credit agencies and commercial lenders will provide Egyptian Refining (ERC) with $2.3bn towards the development of its $3.7bn, 80,000 barrels a day (b/d) Citadel refinery project.
The plant – to be constructed alongside the 140,000 b/d Mostorod refinery, 10 km north of Cairo – will supply the local market with up to 40,000 b/d of high-quality, low-sulphur diesel, from September 2011. The facilities, including a vacuum distillation unit and a hydrocracker, will process atmospheric residue from the Mostorod plant.
The debt features direct lending and/or debt cover from Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (Nexi), Korea-Exim, African Development Bank (ADB) and the European Investment Bank (EIB). JBIC and Nexi are providing $0.9bn in lending and cover between them; Korea-Exim is providing a $0.7bn combination of lending and cover; ADB is providing a $200m senior loan and a $25m junior convertible loan; and the EIB is providing $0.5bn.
A group of pathfinder banks comprising Bank of Tokyo Mitsubishi UFJ, Commercial International Bank, Credit Agricole and HSBC will lend on a book-built basis under the Nexi/Korea-Exim cover, and a group of commercial lenders will provide cover for the EIB debt. The overall debt package will have a 15-year tenor and a cash sweep. The debt package, with Société Générale and Morgan Stanley as financial advisers, launched to London's bank market on 28 April, with financial close expected by July.
State-owned Egyptian General Petroleum Corporation (EGPC) will be the sole off-taker for the plant's diesel, naphtha and reformate output. ERC's equity group comprises Citadel Capital (85%) and EGPC (15%).
The plant will be operated by ERC in conjunction with EGPC subsidiary Cairo Oil Refinery (Corc) – operator of the Mostorod refinery – on land provided by Corc. Preparatory work for the complex started in September 2007. The main engineering, procurement and construction contract, worth $1.8bn, was awarded to a Mitsui/GS Engineering & Construction joint venture in August 2007. GS will carry out the engineering and construction element, with Mitsui providing procurement services.