Carbon Holdings TPC project faces more delays
Carbon Holdings’ $10.9 billion ECA/DFI-backed Tahrir Petrochemicals Corp (TPC) is now expected to reach financial close at the end of Q1 2020, following the slow progress of the project and difficulties over raising equity commitments to fund the scheme.
The financing comprises an 18-year $5.4 billion loan with a $2.8 billion Euler Hermes-covered tranche (95% guarantee), a $400 million direct loan provided by OPIC, a $1.8 billion UKEF-backed tranche (100% guarantee) and a $400 million EDC loan. Commercial banks have been mandated but remain confidential.
US-Exim is set to provide a $10 million direct loan. But with the ECA recently reestablishing a full quorum and EPC contractor Linde moving German content over to the US, the ECA could now look to provide a larger ticket. What’s more, in March Hala El-Mohandes made the move from vice president of structured and export finance at US-EXIM to deputy CEO of project and export finance at Carbon Holdings.
Carbon Holdings had planned to provide 51% of the $5.5 billion equity stake with zero credit pre-completion revenues from TPC (accounts for around $2 billion of net income a year) and capital from Oriental Petrochemical Corporation (Carbons’ existing polypropylene plant), while Egypt General Petroleum Corporation (EGPC) was expected to take 24% of the equity portion. The remaining 25% of equity is set to be provided by a number of DFIs and multilaterals such as the IFC, African Development Bank, African Finance Corporation, EBRD, CDC and Gulf Capital. But DFIs are not willing to put up equity for the project until Carbon Holdings put forward their share.
“The longer it takes the more worried we’re getting about whether they will make it. If it takes too long then they will have to start the due diligence process again”. A source close to the deal tells TXF.
EPC contracts were awarded to Linde, Bechtel, Archirodon, Maire Tecnimont, Hassan Allam Construction and Consolidated Contractors Group. Once operational, TPC is expected to produce 4 million tonnes a year of product and will be the first of its kind in the Middle East and Africa.
