Morocco is almost entirely dependent on fossil fuel imports where it covers about 94% of the total primary energy consumption. The energy import bill exceeded US$7 billion in 2010 with significant impact on the country budget because of the important increase of oil and coal prices in the recent years. By financing SAMIR’s imports of crude oil, ITFC supported Morocco in fulfilling its energy requirements and ensuring a sustainable supply.
SAMIR, the beneficiary, is the sole refinery in the country covering 80% of Morocco’s needs of petroleum products. SAMIR just ended an upgrade project of USD1.2 Billion which lasted 3 years. On one hand the upgrade enabled SAMIR to increase its refining capacity. On a second hand, it enabled the refinery to produce high quality products with a better margins (Gasoil 50 ppm for instance instead of Gasoil 10000ppm). By extending this financing at this critical time, ITFC contributed indirectly to
- the project amortizing, therefore SAMIR performance
- smooth and sustainable supply of Petroleum products in the Market.
This financing was the first Islamic Structured Commodity Finance, where the commodities were stored and monitored by a collateral management firm. The firm that successfully participated in this deal was Audit Control & Expertise (ACE), a worldwide established Collateral Management firm with Collateral Control Services & Commodity Values US$ 4.5 Billion, for 172 Financial Institutions in 76 Countries – 4800 Inspectors and Managers in 32 Offices in 28 Countries.
Disbursement & Repayment steps:
- SAMIR signs Supply Contract with its supplier
- SAMIR pays 20% of Contract Value as a prior deposit to ITFC
- ITFC pays 100% of Contract Value to the supplier after shipping doc. are presented
- Oil stored under supervision & control of Collateral Manager (ACE)
- ITFC sends release instruction to ACE after SAMIR pays the outstanding balance
What makes this deal standout?
- The first ever Islamic Structured Commodity Trade Finance deal in Morocco.
- The first ever Structured Commodity Trade Finance operation in favor of SAMIR. ITFC has a long relationship with SAMIR since the late 70’s of the last Century. However, this is the first operation utilizing structured trade finance.
- The Biggest ever syndicated amount in ITFC for a commodity structured finance deal. Though ITFC has a long experience in financing commodities on structured basis and enjoys an International recognition, this is the first time it mobilized USD 160 Million (adding to its USD 40 Million) for an STF deal.
- The storage and monitoring is quite unique as the crude financed by ITFC is kept on comingling basis with other types of crude oil (of the same grade) in the same tanks. ACE has to ensure permanently that the level of stock exceed ITFC financed stock, and alarms ITFC and SAMIR whenever a critical limit is reached.
In conclusion this type of financing is:
- More Secure: Asset Back financing with 125% coverage where Good are under Collateral Manager custody (Self Liquidating Transaction)
- High Impact: Increase amount of approved operations & achieve development mandate through reaching out to new clients in difficult markets;
- Diversified Portfolio: Improve Risk Management with diversified portfolio (Region/Country/Commodity)
- Customer Satisfaction: Provide customized innovative trade finance solutions