The Multilateral Investment Guaranteee Agency (Miga) has provided its first-ever guarantee for a Shariah-compliant project financing.
The US$427mn guarantee will support investments into a new container terminal in Djibouti. The project is known as Doraleh Container Terminal and it is the first project Miga has supported in Djibouti, after the country joined the agency in January 2007.
Djibouti is strategically placed on one of the fastest-growing East-West international shipping routes, and the planned improvements to the port are intended to help it become a key business hub supporting trade from Asia, Africa to Europe and the Gulf region. The port could also help establish Djibouti as a gateway for the Common Market for Eastern and Southern Africa (COMESA) members, supporting increased trade flows and regional integration.
The terminal is being jointly developed by Dubai Port World, one of the largest marine terminal operators in the world, and the state-owned port company.
Once completed, the port will have an annual capacity of 1.5mn TEU (twenty-foot equivalent container units).
Miga guarantees are protecting the investments of both the Dubai Port World (DPW), as well as those of the financing banks for a total period of ten years against the risks of transfer restriction, war and civil disturbance, expropriation and breach of contract.
The guarantees include US$5mn to cover DPW's equity investment in the project, and US$422mn to cover funding provided by the commercial banks under an Islamic project finance facility. The banks financing the deal are Dubai Islamic Bank, Standard Chartered and WestLB. Miga's involvement in the project is helping support the syndication of a significant amount of this financing.
Miga is also reinsuring US$50mn with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) under its facultative reinsurance programme. It is the first time the insurer has collaborated with ICIEC at a project level.
Executive vice president of Miga, Yukiko Omura comments: "Increased liquidity in Islamic financial markets is leading to growing demand for guarantees that can support Shariah-compliant deals.”
Doraleh Container Terminal (DCT) has a 30-year concession for the development, financing, design, construction, management, operation of the planned container terminal in the city of Doraleh in Djibouti. DCT will have a total quay length of 2,000m and will be developed in two phases.
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