Ross Connelly, executive vice-president and chief operating officer of the Overseas Private Investment Corporation (Opic) has signed a commitment letter enabling the start of construction on a 205-room hotel in Kabul the largest US private investment in Afghanistan in a generation and the most recent example of the Bush administration’s commitment to the country’s reconstruction.
Connelly signed the letter at a conference on Afghanistan’s reconstruction sponsored by the US Trade and Development Agency (USTDA) and the US Department of Commerce.
Opic will provide US$40mn in support to the hotel project, comprising US$24.5mn in financing and US$15.5mn in political risk insurance. Opic is reinsuring a property casualty insurance subsidiary of American International Group (AIG) that is also supporting the project.
The hotel, to be called the Hyatt Regency Kabul, will be located in the heart of Kabul’s business, government, and diplomatic district, and will offer a full range of meeting facilities, as well as a communications and business centre, restaurant and recreation facilities.
Hyatt International Corporation will serve as the hotel operator. Hyatt will provide technical services during the design and construction of the hotel, training and recruitment of the hotel staff prior to the hotel opening, and will manage the hotel after its opening. The project will result in the training and employment of about 300 Afghans.
“Establishment of the Hyatt Regency Kabul will help Afghanistan begin its reconstruction, and does so with substantial developmental benefits, especially job creation and training for Afghans,” Connelly says. “Opic is pleased to help enact the Bush administration’s ongoing commitment to the reconstruction of Afghanistan , and looks forward to cooperating with the Afghan government on additional projects.”
President Hamid Karzai, in a recent interview on CNN, said the hotel project demonstrated “a vote of confidence in the stability of the government” by the Bush administration.
Construction of the hotel will engage the services of three leading Turkish construction companies, Tepe, Yuksel and Limak, as well as the Afghanistan Reconstruction Company, an Afghan-American company committed to assisting in rebuilding Afghanistan’s physical infrastructure and reviving Afghan business and commercial institutions.
The project represents significant progress toward fulfilling President Bush’s January 2002 announcement that Opic would establish a US$50mn line of credit to promote private sector investment in Afghanistan . At a meeting with President Karzai in March, Opic president and CEO Peter Watson increased Opic’s line of credit to Afghanistan to a minimum of US$100mn.
Watson announced in February that Opic would provide political risk insurance to a US manufacturer donating a compressed earth block machine for the construction of three schools in Afghanistan , at least one of them for girls.
Opic was established as an agency of the US government in 1971. It helps US businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports US foreign policy. Because Opic charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
Opic’s political risk insurance and financing help US businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 32-year history, Opic has supported US$145bn-worth of investments that have helped developing countries to generate over US$11bn in host-government revenues and create over 680,000 host-country jobs. Opic projects have also generated US$65bn in US exports and created more than 254,000 American jobs.