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Egyptian Refinery Project Promoted by Citadel Capital

Project cost and funding mix

Egyptian Refining Company (ERC) is the largest infrastructure megaproject both in Egypt and Africa as a whole in the form of a public-private partnership. According to the Egyptian Refining Company (n.d.), this modern refinery is worth $4.3 billion. At the same time, equity capital is $1.5 billion, and debt capital is $2.8 billion.

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Qalaa Holdings (2021) asserts that $ 1.5 billion in equity were provided by the state-owned Egyptian General Petroleum Corporation (EGPC), Qatar Petroleum International (QPI), Qalaa Holdings (formerly Citadel Capital), World Bank-affiliated International Finance Corporation (IFC), Dutch entrepreneurial development bank FMO, German development finance institution DEG, InfraMed Fund, as well as investors from Egypt and the GCC countries. It is noteworthy that Qalaa Holdings owns 13.14% of ERC shares, and Qatar Petroleum owns 38.1% of Arabian Refinery Company, which owns 66.6% of ERC shares.

Private and development banks provided $ 2.8 in the form of a debt package. Among them were:

  • Japan Bank for International Cooperation and Nippon Export and Investment Insurance (JBIC and NEXI, providing $ 900 million).
  • Export-Import Bank of Korea (KEXIM, $ 800 million).
  • European Investment Bank (EIB, $ 500 million).
  • African Development Bank (AfDB, $ 200 million).
  • Mitsui & Co., MUFG Bank, HSBC, Calyon Credit Agricole, and CIB.

Demand, supply, and risks

With the expansion and development of the Egyptian economy, domestic demand for petroleum products, especially diesel fuel, increased. According to the Organization of the Petroleum Exporting Countries (2019), Egypt’s average demand for petroleum products is 794,000 BDP.

Economic Benefits (n.d.) states that ERC produces about 4.2 million tonnes of petroleum products and by-products per year. Of these, 2.255 million tons are diesel fuel of Euro V standard, about 600 thousand tons of aviation kerosene, 522 thousand tons of reforming product (gasoline component), 336 thousand tons of naphtha, 315 thousand tons of fuel oil, and 79 thousand tons of liquefied petroleum gas per year.

In Egypt, a decrease in sulfur content in diesel fuel is on the agenda. Like many African countries, Egypt supplied diesel with high sulfur content. Although ERC produces EURO V fuel, which is much better than other fuels available in the country, its quality carries environmental risks. If the Egyptian Environmental Affairs Agency introduces mandatory quality standards for diesel fuel, the company will have to improve its refining processes, which implies additional costs.

Initial problems with the project and final restructuring

Major construction contracts for the US $ 4.3 billion ERC project were signed in 2007. However, difficulties in obtaining funding, compounded by years of political and economic turmoil, including the global financial crisis (since 2008) and the revolution (2011), have hampered progress. These financial problems resulted in the ERC being unable to provide funding for several years, resulting in construction delays from the original 2007-2011 schedule to the 2014-2017. According to Qalaa, ERC is completing financial restructuring as it drives to completion (2018). The restructuring of the $ 2.6 billion debt package signed in 2010 was completed in 2018.

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However, in 2018 the company took out new loans and capital commitments of about USD 500 million. The restructuring was carried out under an agreement with construction partners GS Engineering from Korea and Mitsui from Japan. Qalaa Holdings (2021) asserts that the ERC leadership has begun negotiations on a whole debt restructuring to hedge against market uncertainties as well as a possible third wave of COVID-19.

Moreover, ERC faced the challenge of efficiently managing multimillion-dollar resources, including building materials, supplier contracts, and human resources. There was a risk of delays that could be eliminated through the adoption of industry best practices. Egyptian Refining Company (n.d.) notes that the goal was to implement a standardized approach to all aspects of the business, from purchasing materials for a refinery to analyzing supplier relationships. Thus, ERC has developed new instruments to manage its business, supported by SAP ERP software for finance, controlling, materials management, and human capital management to achieve this aim.


Economic Benefits. (n.d.). ERC.

Egyptian Refining Company. (n.d.). IBM Corporation.

Egyptian Refining Company. (n.d.). Qalaa Holdings.

Organization of the Petroleum Exporting Countries. (2019). The OPEC annual statistical bulletin [PDF document].

Qalaa Holdings. (2021). Qalaa Holdings reports FY 2020 results [PDF document].

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Qalaa’s ERC completes financial restructuring as it drives to completion. (2018). Enterprise Ventures LLC.

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