U.S. Gov't Agency Plans $2.84 Billion Loan for Oil Refinery—In Colombia

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(CNSNews.com) - The U.S. Export-Import Bank, an independent agency of the federal government, is now planning a $2.84-billion loan for a massive project to expand and upgrade an oil refinery--in Cartagena, Colombia.

The money would go to Reficar, a wholly owned subsidiary of Ecopetrol, the Colombian national oil company.

“This is part of a $5.18 billion refinery and upgrade project in Cartagena, Colombia supplying petroleum products to the domestic and export markets,” the Export-Import Bank said in a statement.

The U.S. government-controlled bank says the $2.84-billion in financing it plans to undertake will be the second largest project it has ever done. The largest was $3 billion in financing for a liquid natural gas project in Papua New Guinea.

The statement released by the bank said that on April 7 the bank’s presidentially-appointed board of directors had “voted to grant preliminary approval for a $2.84 billion direct loan/loan guarantee” for the Colombian refinery project.

Export-Import Bank Spokesman Phil Cogan told CNSNews.com that the bank could not say at this time how much of the $2.84 billion would be directly loaned to the Colombian refinery company and how much would be in loans guaranteed by the bank--although he expected it to be a combination.

“It is conceivable it could be all a direct loan,” said Cogan. “Right now it is set up so that the board could do either a complete direct loan or a combination of direct loan and guarantee. That hasn’t been determined yet.”

Since December, the bank has also approved almost $880 million in other loans and loan guarantees to Reficar’s parent company, Ecopetrol. So, in total, if the new $2.84 billion in loans is finalized, the Columbian national oil company and its wholly owned subsidiaries will have received $3.72 billion in financing backed by a U.S.-government-controlled entity within a span of five months.

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In its ordinary procedure for financing projects of this magnitude, the board of the Export-Import Bank votes its preliminary approval, notifies Congress of that preliminary approval, then waits five weeks before voting final approval of the deal. This allows members of Congress to comment on the planned financing project.

“The Reficar transaction is subject to congressional notification, with a final vote anticipated approximately 35 days following the expiration of the notification period,” says the bank’s press release on the loan.

When asked if Congress can veto the loan, Ex-Im Spokesman Cogan said, “No.”

http://www.cnsnews.com/news/article/feds-plan-284-billion-loan-oil-refinery