ERC Concludes Negotiations Over US$ 300 Mln Letters Of Credit Next Week

Egyptian Refining Company (ERC), subsidiary of Citadel Capital Company, will conclude the negotiations by next week with seven banks over acquiring letters of credit and letters of guarantee for both Egyptian General Petroleum Corporation and Citadel Capital; domestic investors with value to US$ 300 million, said Mostafa Al Ramly, chief financial officer of ERC.

Al Ramly added in an interview with Amwal Al Ghad that ERC is negotiating the deal with Commercial International Bank (CIB), Banque Misr, Banque du Caire, HSBC, Arab African International Bank, Ahli United Bank and Mashreq Bank.

These letters of guarantee will cover the liabilities of ERC towards international institutions that are contributing with EGP 2.6 billion for the establishment of a developed oil refinery in Cairo.

As being providers of a loan with value of EGP 2.6 billion, these financial institutions conditioned on Egyptian institutions offering letters of guarantee in case of increasing the investment cost in 4 years so as to cover the increase of the Company’s capital when needed.

Sources told Amwal Al Ghad that Banque Misr studies contributing with US$ 130 million in the project, Banque du Caire studies to contribute with EGP 75 million and CIB studies to contribute from US$ 40 to 60 million.

The investment cost of the project reached US$ 3.7 billion and has an annual design capacity of 4 million tons of petroleum products; 2.3 million tons of Diesel, 860 thousand tons of benzene and 80 thousand tons of butane. The project will finance balance of payments deficits by about US$ 3.6 billion annually.

Citadel for Financial Consultations (Citadel Capital) said it entered advanced stages of negotiations with international financial institutions to have US$ 2.6 billion loans to finance the establishment of a developed refinery in Cairo.

Many financial institutions are sharing in the US$ 2.35 billion senior loans including Japan Bank for International Cooperation, Nippon Export and Investment Insurance, Export-Import Bank of Korea, European Investment Bank and African Development Bank.

Besides, US$ 225 million mezzanine loans will be disbursed by a Japanese company and African Development Bank.

The project capital is US$ 1.13 billion which is covered by international financial institutions and investors. Citadel capital contributes with US$ 150 million and Egyptian General Petroleum Corporation provides about 24% of the capital.