ANNOUNCEMENT 30 May 2014

On 29 May 2014, the Japan Bank for International Cooperation (JBIC) signed a buyer's credit agreement in project financing with STAR RAFİNERİ ANONİM ŞİRKETİ to promote Japanese exports.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

The Japan Bank for International Cooperation, press release of 30 May 2014, Buyer's Credit for STAR Oil Refinery Project in Turkey: http://www.jbic.go.jp/en/information/press/press-2014/0530-21930
JBIC information on export loans: http://www.jbic.go.jp/en/finance/export

Inception date: 29 May 2014 | Removal date: open ended

Trade finance

The buyer's credit agreement in project financing between JBIC and the Turkish STAR RAFİNERİ ANONİM ŞİRKETİ (STAR) has a total maximum value of USD 294 million. Additionally, the loan is co-financed by a number of private financial institutions amounting to an approximate value of USD 485 million. The governmental agency Nippon Export and Investment Insurance will provide an insurance for the co-financed portion.

The Turkish company is invested in by the State Oil Company of the Azerbaijan Republic and The Ministry of Economy and Industry of The Republic of Azerbaijan. The buyer's credit agreement partially finances STAR's oil refinery plant project in Turkey in regards to engineering, procurement and construction. The Japanese company Japanese Itochu Corporation will in part undertake the engineering, procurement and construction area of the project through the participation in a joint venture.

In this context, JBIC stated: "the project contributes to creating export opportunities for Japanese companies and maintaining and improving the international competitiveness of Japanese industries. ... JBIC will continue to support the export of plant, machinery and equipment to Turkey by Japanese companies, and the expansion of business participation opportunities in Turkey, by drawing on its various financial facilities and schemes for structuring projects, and by performing its risk-assuming function."

Buyer's credit agreements
JBIC provides direct loans named buyer’s credit to overseas importers. Loans are obtained if it finances the purchase of Japanese machinery, equipment or technology in specific eligible sectors. The Bank hereto stated that these loans are intended to “positively contribute to Japanese companies”. Further information can be found on the Bank’s website under export loans.

Project finance
Project financing loans include preferential terms such as repayments being solely made from the project’s cash flow generation and secured on the basis of the project's assets alone. As such the loan agreement is tied to the project's finances and not the company in question.

The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets and from foreign subsidiaries.

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