The Egyptian Refining Company (ERC) seems to face financial problems after banks has retreated from financing the issuance of letters of guarantee worth US$ 300 million for both the Egyptian General Petroleum Corporation and Citadel Capital; domestic investors. Sources said banks retreated from finance the issuance because of a dollar liquidity deficit on political turmoil that followed last year's revolution, in addition to the involvement of many banking officials in graft cases. Arab African International Bank (AAIB) said it studies contributing with US$ 15 million, up from the US$ 75 million it had earlier promised to offer, sources said. ERC has been in negotiations with seven banks for more than three months over the finance. Banque Du Caire was the only bank that signed a contract. The bank approved to contribute with US$ 40 million after announcing before it would contribute with US$ 75 million. ERC negotiates with a number of local banks; most prominently are Banque Misr, HSBC, AAIB, Ahli United Bank, Mashreq Bank and Banque Du Caire, but their contributions have not been decided yet. The letters of guarantee will cover the liabilities of ERC towards international institutions that are contributing with EGP 2.6 billion for the establishment of a developed oil refinery in Cairo. As being providers of a loan worth EGP 2.6 billion, these financial institutions the Company shall offer letters of guarantee in case of increasing the investment cost in four years so as to cover the increase of the Company's capital when needed. The investment cost of the project is US$ 3.7 billion. The project has an annual design capacity of 4 million tons of petroleum products; 2.3 million tons of Diesel, 860 thousand tons of benzene and 80 thousand tons of butane. The project will finance balance of payments deficits by about US$ 3.6 billion annually.
