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Projects

Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Egyptian Refining Company
Project ID
11051
Fiscal year
2015
Status
Active
Guarantee holder
Deutsche Investitions und Entwicklungsgesellschaft mbH
Investor country
Germany
Host country
Egypt, Arab Republic of
Environmental category
A
Sector
Oil and Gas
Date SPG disclosed
November 22, 2013
Project Board date
May 15, 2014
Gross exposure
 $23.4 million
Project type
Non-SIP
Strategic priority area
Complex Project

View Summary of Proposed Guarantee


Project Description

On July 10, 2014, MIGA issued guarantees of $23.4 million covering an equity investment by Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG) of Germany in Egyptian Refining Company S.A.E. (ERC) in Egypt. The coverage is for a period of up to eight years against the risk of war and civil disturbance.

The project consists of the construction of a $3.7 billion, 91,000 barrel per day hydro-cracking and coking facility in Mostorod, Greater Cairo. ERC will upgrade locally available refinery atmospheric residue into lighter products, such as diesel and jet fuel, for the domestic Egyptian market. The project will also include environmental upgrades to the adjoining facilities of state-owned Cairo Oil Refining Company and Petroleum Pipeline Company.

In addition to DEG, this project is supported by a number of development finance institutions—among them the International Finance Corporation, the African Development Bank, and the European Investment Bank.

The project will optimize domestic production of low-sulfur refined products, thus addressing domestic consumer and industrial demand. It will also increase domestic capacity for upgrading locally available atmospheric residue into lighter products for the domestic market, bringing significant environmental benefits and savings through import substitution. ERC will make substantial contributions to government revenues through corporate taxes, customs duties on imported equipment, and sales taxes on domestic purchases. The project is expected to create 700 direct jobs, as well as employ 7,000 workers from nearby communities during the peak construction phase. ERC has already provided vocational training to local workers and expects to undertake over $5 million in community investment outlays by the end of the construction period.

The project is consistent with the joint IBRD/IFC Interim Strategy Note for Egypt, especially the pillars relating to improving economic management and job creation. By supporting this project MIGA sends a positive signal to potential investors that the Agency is open for business in Egypt, contributing to greater investor confidence in the country.

The project is consistent with MIGA’s strategy of facilitating investment into complex projects, as well as its efforts to support foreign direct investment into the Middle East and North Africa by mobilizing $1 billion in insurance capacity.

 
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