The International Finance Corporation (IFC) has agreed to invest $120 million in Egyptian Refining Company (ERC), a $3.7 billion project that is one of the largest private sector industrial developments in Africa.
Citadel Capital, the Egyptian private equity firm which launched ERC in June 2007, is a principal investor and has an 8.2 percent stake in the refinery. The project is yet to reach financial close.
In a statement saying he was “delighted” with the IFC’s participation, Citadel managing director Marwan Elaraby added: “This project will have a notable effect on both Egypt’s economy and on the environment, particularly in the Greater Cairo area, and has therefore enjoyed the full backing and support of the government of Egypt and, in particular, of the Ministry of Petroleum.”
The state-of-the-art second-stage refinery will produce over 4 million tons of refined products when completed, including 2.3 million tons of EURO V diesel, currently the cleanest fuel of its type in the world.
Located in the Mostorod district of Cairo, the refinery will sell its products to the state-owned Egyptian General Petroleum Corporation under a 25-year off-take agreement at international prices.
According to the IFC website, Egypt currently lacks the refining capacity to meet its growing demand for lighter fuels such as diesel and relies heavily on the importation of these products. ERC aims to help increase Egypt’s ability to produce fuels domestically and therefore create savings to the economy through import substitution.