Egyptian oil refinery project raises $2.6bn in debt

Egyptian Refinery Company (ERC) has signed a $2.6 billion debt package for the construction of a $3.7 billion state-of-the-art second-stage oil refinery in the Greater Cairo district of Mostorod. The project is one of Africa’s largest project finance deals to date.

Multilaterals pile into Egyptian refinery

The package comprises $2.35 billion of senior debt from institutions including the Japan Bank for International Cooperation, Nippon Export and Investment Insurance, the Export-Import Bank of Korea, the European Investment Bank and the African Development Bank. First draw-down of the senior debt facilities is expected within the next two months.

In addition, $200 million of subordinated debt is being provided by Mitsui & Co, which is part of a consortium of developers building the refinery, and a further $25 million in subordinated debt from the African Development Bank.

News of the debt package comes just over a month after the International Finance Corporation said it would be investing $100 million of equity in the project.

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. Citadel also has management control of ERC. State-owned Egyptian General Petroleum Corporation owns 15 percent of the project.

Citadel Capital managing director Marwan Elaraby described the project as “one of the largest project finance deals ever assembled in Africa” and said it has “won outstanding backing from leading global institutions because it will have a notable effect on both Egypt’s economy and on the environment, particularly in the Greater Cairo area”.

The refinery will produce over 4 million tons of refined product per annum when completed, including 2.3 million tons of EURO V diesel, a clean fuel. Construction of the refinery is expected to complete in the second half of 2014 in time for operations to begin in 2015.