CAIRO: A consortium of four banks, headed by Commercial International Bank (CIB), has finalized a deal with the Egyptian Propylene and Polypropylene Company (EPPC) to finance $450 million (LE 2.6 billion) for the establishment of a new processing plant in Port Said.
The deal, signed Tuesday night, represents the largest lending transaction this year completed entirely by Egyptian banks for a single project.
The plant, expected to produce 350,000 tons of propylene and polypropylene annually, will draw a total investment of more than $690 million (LE 3.9 billion), according to CIB officials.
Construction is due to begin this year for the plant, which will begin production by 2010.
Other participating banks include The National Bank of Egypt (NBE), Banque Misr and NSGB.
“People are saying Egyptian banks do not invest in the industrial sector,” NBE Chairman Hussain Abdel Aziz told The Daily Star Egypt.
“I think this project shows the commitment of Egyptian banks to industry as long as serious, legitimate proposals are made.” Abdel Aziz added about 50 percent of NBE’s loan portfolio falls in the industrial sector.
According to sources close to the transaction, the project will provide 2,000 job opportunities and will slate 65 percent of its production for export. CIB officials declined to disclose loan terms on grounds of confidentiality agreements.
Upon completion, the plant will become the first in Egypt to implement steam active reforming in producing propylene and polypropylene, a method first introduced in the early 1990s in the United States and Argentina. In addition to EPPC, seven shareholders have signed to finance the project including The Egyptian Holding Petrochemical Company, Eastern Holding Company, and Amwal Al-Khalij. Ownership structure specifics were not immediately disclosed.
In 2006, petrochemicals constituted 40 percent of Egyptian exports and 8 percent of the country’s gross domestic product. Propylene and polypropylene are carbon-based products commonly used as fuel in industrial plants.