VENTURES AFRICA – A consortium, led by Citadel Capital and Qatar Petroleum, have secured $3.7 billion finance facility for an Egyptian petroleum refinery project in partnership with the Egyptian government, the project operator said on Thursday.
According to a statement by Egypt Refining Company (ERC), the finance, put together by private equity firm Citadel, includes a $1.1 billion equity investment and is backed by a $2.6 billion debt package.
The ERC said the refinery, on the outskirts of Cairo, will contribute $300 million in direct benefits to the state and create jobs. The project will also produce more than 4.1 million tonnes of refined products and oil derivatives annually, including more than 2.3 million tonnes of Euro V diesel per year. This is expected to cut Egyptian diesel imports by up to 50 percent, which will consequently “improve air quality in the Greater Cairo Area (and) help reduce Egypt’s annual subsidy bill”.
Serial attacks on the natural gas pipeline that runs from Egypt to Israel has cut off supplies to the region and have forced Egypt to seek more fuel from abroad to meet rising demand from power generation and fuel needs for heavy vehicles.
Egypt’s military rulers have sought to hike diesel imports as fuel shortages in central Cairo this year have caused long queues at petrol stations and traffic jams in some main thoroughfares, angering the public.
Egyptian General Petroleum Corp (EGPC), in its latest tender, is seeking to buy more than 1 million tonnes of gasoil, or diesel, from July to September, worth around $1 billion — almost as much as it sought in the preceding six months.
According to a statement, the financing package for the refinery project sees EGPC invest $270 million for a 23.8 percent interest while Qatar Petroleum International committed over $362 million for a 27.9 percent stake.
Citadel has directly and indirectly invested over $155 million and holds an equity stake of 11.7 percent.
Other partners include Gulf Arab investor, the International Finance Corporation, the Netherlands’ development bank FMO, Germany’s private-sector lender DEG and European Investment Fund’s InfraMed Fund, Reuters reported.
Egyptian investment bank EFG Hermes acted as placement manager for the equity component. The financing is backed by a $2.6 billion debt package arranged by ERC’s financial advisor, French bank Societe Generale and made up of senior and subordinated debt issued to Asian and African development agencies and banks.
Operation at the refinery is billed to commence by 2016.