The Egyptian Refining Company, a partnership between Citadel Capital, its co-investors and the state-owned Egyptian General Petroleum, has signed a debt package of USD2.6bn to finance construction of its USD3.7bn second-stage oil refinery in the Greater Cairo Area.

The refinery will produce over four million tons of refined products per annum when completed, including 2.3 million tons of Euro V diesel, the cleanest fuel of its type in the world.

“We are delighted to announce the debt package for what we believe stands as one of the largest project finance deals ever assembled in Africa,” says Citadel Capital managing director Marwan Elaraby. “ERC has won outstanding backing from leading global institutions because it will have a notable effect on both Egypt’s economy and on the environment, particularly in the Greater Cairo Area. It has similarly enjoyed the full backing and support of the Government of Egypt and, in particular, of the Ministry of Petroleum.”

The debt package includes USD2.35bn of senior debt and USD225m of subordinated debt. Institutions participating in the senior debt package include the Japan Bank for International Cooperation, Nippon Export and Investment Insurance, the Export-Import Bank of Korea, the European Investment Bank and the African Development Bank. First drawdown under the senior debt facilities is expected in the coming two months.

Mitsui, which is part of the consortium of contractors building the refinery, is providing USD200m of subordinated debt financing. The African Development Bank is providing an additional USD25m of subordinated debt financing.

News of the debt package came just weeks after the International Finance Corporation announced it would invest equity of USD100m in the project.

The refinery, to be located in the Greater Cairo district of Mostorod, will sell its production to the state-owned Egyptian General Petroleum under a 25-year offtake agreement at international prices.

“Considering the operational, financial and regulatory complexity of building a refinery today, the signing of ERC’s debt package has come together remarkably quickly,” says Tom Thomason, chief executive officer of Egyptian Refining Company. “ERC will improve the environment of greater Cairo by preventing on an annual basis approximately 93,000 tons of sulphur from being released into the atmosphere. It will also invest in improvements to CORC’s environmental performance, particularly the emission of greenhouse gases.”