Japan Bank for International Cooperation (JBIC) has signed a buyer’s credit framework agreement with Sonatrach, the Algerian state-owned hydrocarbon company.
This agreement has set a template of loan terms so that JBIC will be able to expeditiously provide buyer’s credit to Sonatrach when Japanese firms obtain machinery and equipment orders from the company. The timely provision of buyer’s credit upon winning orders aim to help Japanese exporters enhance their competitive edge against foreign competitors and increase their opportunities for winning plant orders.
Sonatrach is the leading company in Algeria’s oil and gas industry, which accounts for more than 90% of Algerian exports. The company is the largest purchaser of Japanese plants in the African region. Since 1976, JBIC has provided an overall total of Y680bn as buyer’s credit for Sonatrach.
In recent years, however, European and US firms have increased their competitiveness by using a similar credit framework which has been set up between Sonatrach and European and US financial institutions. JBIC thus signed this framework agreement so that Japanese firms will be on a level playing field with foreign competitors.
This framework agreement aims to strengthen the financial support JBIC has provided to date for Japanese exports to Sonatrach. At present, potential business deals to which this framework may be applicable amount to more than US$500mn. The framework will thus financially support Japanese plant exports to Sonatrach, while serving to promote Algeria’s economic development.