| Finance
UK Export Finance U
The British Government’s office Export Credit Agency helps UK exporters with business overseas.
K Export Finance (UKEF) - the operating name of the Export Credits Guarantee Department - is the British
Government’s official Export Credit Agency (ECA).
UKEF exists to help UK exporters win business overseas by providing various forms of financial support including: l Credit insurance against the risks of not being paid under the export contract. Typically UKEF’s credit insurance policies provide 95% cover against the commercial and political risks of not getting paid; l Guarantees to banks to facilitate the provision to UK exporters of bonds and working capital loans. UKEF provides banks with up to 80% cover against their payment exposure to the UK exporter thereby greatly increasing their capacity to provide bonds and working capital loan in the amounts required; l Guarantees to banks providing medium and long term loans to overseas buyers of semi-capital and capital goods and services procured from UK companies. The unconditional nature of UKEF’s repayment guarantees means banks can generally lend larger amounts, for longer periods and at cheaper rates of interest than would otherwise be the case. Such loans, generally for higher value business (typically contracts in excess of US$5m), can therefore significantly enhance the attractiveness of UK exporters’ bids. l Direct loans at fixed rates of interest to overseas buyers of goods and services from UK companies, particularly in circumstances where commercial bank loans cannot be arranged - potentially for contracts with a value as low as £1m. UKEF works closely with UKTI across the whole range of major projects identified in its HVO programme with the aim of maximising the value of contracts
global-opportunity.co.uk
awarded to UK exporters. A significant number of British companies have already succeeded in securing major contracts under the HVO programme as a result of this support. Prime examples include: l Front-End Engineering and Design (FEED) and Engineering, Procurement and Construction (EPC) contracts with a combined value of more than US$1bn were awarded to the UK operations of Fluor, Foster Wheeler and Jacobs in the context of the US$20bn Sadara integrated petrochemical project sponsored by Saudi Aramco and Dow Chemicals currently under construction in Jubail Industrial City, Saudi Arabia. These contracts are being part-
financed by a US$700m long term project financing loan guaranteed by UKEF. In addition more than 60 British companies successfully secured eligible supplier status for Sadara and future Aramco / Dow projects as a direct result of a special “Sharefair” organised by UKTI and the Energy Industries Council (EIC) with UKEF support for the sponsors at the Oval Cricket Ground in London. l In 2013 Petrofac was awarded a major EPC contract, with a value of between US$600m and US$800m, for the IPCI Phase 2 polyethylene project in Kazakhstan. This followed directly from the signature by UKEF of a US800m Memorandum of Understanding with Samruk Kazyna (the sovereign wealth fund of Kazakhstan) during the Prime Minister’s successful trade mission to Atyrau and Astana in July 2013.
ISSUE 01 | GLOBAL OPPORTUNITY 2014 43
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