32846 - GTST Ethiopia Trade Facility

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Summary of Investment Information

Project Number

32846

Company Name

INDEPENDENT PETROLEUM GROUP K.S.C.P

Date SPI Disclosed

Apr 10, 2013

Country

Ethiopia

Region

Africa

Projected Board Date

May 13, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Gbl Ind, Manufact, Agribus & Services

Industry

Financial Markets

Previous Events

Approved : May 29, 2013
Signed : Nov 20, 2013
Invested : Dec 6, 2013

Sector

Trade Finance

Project Description

IFC, BNP Paribas (“BNPP”) and other commercial lenders are jointly considering establishing a trade finance facility of up to US$ 400 million to finance importation of refined oil products in Ethiopia. The facility will provide an international energy trading company with an import finance facility to maintain the supply of oil products in Ethiopia over a period of up to two years. This facility will help secure fuel supply to the second most populated country in Sub-Saharan Africa and one of the fastest growing economies in Africa. A steady supply of fuel through reliable channels is critical to ensure a better pricing, and therefore control inflation. Of the total facility amount, IFC’s exposure will be up to US$ 75 million through a risk sharing arrangement.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

Development Impact

The proposed investment will have significant development impacts as follows:

(a) Maintain the availability of trade finance for trade businesses in Ethiopia. The Project is expected to finance about US$ 1 billion of imports of oil products to Ethiopia per year. This will ensure stability in supply of energy products into an IDA economy.

(b) Ensuring availability of energy products is critical for retail and industrial consumption, power and transportation sectors.

(c) Support to Private Sector - The facility will indirectly support the business activities of private marketing and distribution companies in the downstream oil sector.

With the help of IFC, the proposed sizeable facility will fill its funding gap and therefore assure stability in the financing of oil flows into the second most populated country in Sub-Saharan Africa, thus covering more than 50% of the country''s energy needs. Due to the continuous constraints on banks traditionally active in the trade finance space, including European banks, the proposed facility will allow continued importation of energy products into Ethiopia. Without this facility, major sectors and economic agents in transportation, agriculture, industrial and commercial entities and households would be negatively impacted, hurting economic activity.

E&S Category Rationale / Risks and Mitigation

This project has been classified as FI-2 (medium risk) according to IFC’s Policy on Environmental and Social Sustainability. The transfer of petroleum products will be undertaken by an international oil and gas company who is experienced in such activities and which we anticipate to have suitable vessels and management systems to mitigate potential risks. In addition, the terminal in Djibouti has adequate management systems and has been designed and constructed according to internationally recognized standards for such facilities.

The main environmental and social risks and impacts relate to incidents during the transfer of petroleum products to the terminal in Djibouti. In addition, the Red Sea and Gulf of Aden through which the oil shipments will travel is also subject to piracy. The Red Sea and Gulf of Aden are rich in biodiversity (coral reefs, mangroves, etc.) and very sensitive to spills of petroleum products. More specifically, key environmental and social risks and impacts relate to the following:

Shipping: Oil spills during bunkering in the port and the loading and off-loading of oil, pollution due to the release of ballast water, sewage water, bilge and cargo tank wash water, inappropriate waste disposal (hazardous and non-hazardous) and the occupational health and safety of seafarers.

Terminal: Water and soil contamination resulting from fuel leaks from storage tanks or pipelines, emissions of volatile organic compounds (VOCs), hazardous and non-hazardous waste disposal, occupational health and safety and a fire / explosion associated with a vessel or at the terminal.

Task Description

Anticipated Completion Date

Prior to commitment, BNPP will be required to share the environmental and social due diligence for the project and this will need to be to the satisfaction of IFC. The focus thereof will be to confirm the activity complies with IFC’s Performance Standards, national laws and regulations, and IFC’s Exclusion List and define additional mitigation measures if necessary over and above those already identified. In addition, BNPP will confirm its approach to ongoing monitoring of the international energy trading company’s environmental and social performance to the satisfaction of IFC.

Prior to commitment.

Contacts

For Inquiries About the Project, Contact

BNP Paribas S.A.Pascal Hénissemailto:mailto:pascal.henisse@bnpparibas.com

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