IFC pledges $144 million for Egypt’s energy infrastructure, ports

The International Finance Corporation (IFC), a member of the World Bank Group, announced Thursday it is providing a financing package of $144 million to Egypt’s Sonker Bunkering Company.

The package aims to help develop vital new energy infrastructure and boost the performance and competiveness of Egypt’s ports.

IFC’s financing – including a loan of up to $70 million, $52 million mobilized from partners, and $22 million in mezzanine financing – will go toward the development of Egypt’s first private Liquid Bulk Terminal at Sokhna Port on the Red Sea. The financing is alongside a $72 million senior loan and $22 million mezzanine loan from the European Bank for Reconstruction and Development (EBRD), and a $72 million equivalent loan from the Commercial International Bank (CIB).

The new facility will handle the import of three essential energy products, liquid petroleum gas, gasoil, and liquefied natural gas. Demand for all three is expected to continue to rise over the next few years as the need for power increases amid continued population growth, according to IFC.

“The Egyptian government is taking a quantum leap toward achieving a more resilient and sustainable economy,” said Ossama Al Sharif, Sonker Managing Director. “They have helped us develop this pioneering terminal as a public-private partnership to meet the growing demand for energy, and help transform the area into a regional hub for trading petroleum products.”

The project is expected to boost Egypt’s port sector by delivering key energy handling infrastructure at a time of declining capacity in existing ports and strong energy demand. It will also create a number of jobs around the operation of the terminal.

“IFC’s financing will help create vital energy infrastructure for Egypt at a time when the demand for power is growing,” said Nada Shousha, IFC Country Manager for Egypt. “Our aim is to spur job creation and minimize infrastructure gaps by increasing private sector participation in the economy. We also hope to send a positive market signal to international and domestic private sector investors.”

Philip ter Woort, EBRD Director for Egypt said: “Through this investment, EBRD aims at increasing energy security in Egypt by increasing capacity and introducing the highest quality and environmental standards.” “Installing the necessary infrastructure is crucial for energy security in Egypt as it will increase storage and handling capacity for gasoil, liquefied petroleum gas and natural gas imports.”

IFC will also help Sonker develop a corporate governance plan and provide guidance on environmental and social issues in order to comply with IFC’s Performance Standards.

The investment is part of World Bank Group strategy in Egypt to encourage private investment and support job creation in a key infrastructure sector, while providing much-needed long-term foreign currency financing and helping to address the country’s energy security issue.

From FY2011 through FY2015, IFC’s investments in Egypt totaled close to $1.2 billion, including mobilization funds. These investments covered 18 projects across a host of sectors, including financial markets, infrastructure, oil and gas, agribusiness, manufacturing, and health care.