- Agreement supports APICORP’s trade-finance business growth by easing risks in trade finance transactions
- Documentary Credit Insurance Policy will help APICORP mitigate commercial and political risks affecting LC transactions
- Agreement is the first signed by ICIEC with an Arab Multilateral Financial Institution
Bahrain, 20 November, 2013: Arab Petroleum Investments Corporation (APICORP), the Multilateral Development Bank owned by the ten member nations of the Organization of Arab Petroleum Exporting Countries (OAPEC), has signed a Documentary Credit Insurance Policy (DCIP) with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IDB) Group.
The Documentary Credit Insurance Policy will help APICORP effectively manage risks affecting its Letter of Credit (LC) transactions and LCs of petroleum products exports in ICIEC member countries. The DCIP is an effective tool to mitigate risk of non-payment of Letter of Credit (LC) arising from a variety of factors. These include insolvency of the buyer/ issuing bank; failure or refusal of the issuing bank to provide reimbursement on due date; currency inconvertibility and transfer restrictions imposed by issuing bank’s country; expropriation, confiscation or government intervention in the business of the issuing bank; and war or civil disturbance in the issuing bank’s country. The DCIP provides insurance coverage to transactions in which a minimum of 30% of the added value in the products transacted come from ICIEC member states.
Ahmad Bin Hamad Al-Nuaimi, Chief Executive and General Manager of APICORP said: “We are extremely happy to advance our cooperation with the IDB’s ICIEC by signing the DCIP. Trade finance forms an important focus of our diversification strategy and contributes significantly to our mandate to support Arab energy industry development. The DCIP will help us reliably protect and control risks in trade finance transactions, which in turn will help us better support the trading needs of Arab energy companies and enhance our trade-finance business growth. The ICIEC’s extensive geographical remit and its mandate to encourage exports from member countries, some of whom are our own shareholders, make it a highly strategic partner for us. Partnerships like these are key to our ability to expand our trade finance business and create value and growth for energy companies in the region.”
At the signing ceremony, Dr Abdel-Rahman El-Tayeb Taha the Chief Executive Officer of ICIEC stated: “Events in the region show clearly the important role Credit and Political Risk Insurance can play in supporting trade and attracting foreign investment into countries which need it the most. We are confident that the signed policy will help APICORP in mitigating risks related to the default and non-payment of Letters of Credit confirmed by APICORP and thereby help to expand their trade transactions and ultimately increase exports from member countries.” Dr. Taha added: “This signed DCIP between ICIEC and APICORP is the first signed between ICIEC and a joint Arab Financial Institution and represents a beneficial alliance between two sister multilateral institutions.”
APICORP offers a range of trade finance solutions for import and export transactions designed to meet the challenging needs of energy companies in the Arab world. APICORP has rapidly grown its trade finance and structured commodity finance activities over the last three years complementing its historically strong project finance franchise. Trade and structured commodity finance services and loans provided by APICORP in 2013 helped finance hydrocarbon transactions involving the world’s largest hydrocarbon commodity traders transacting with Arab-based refiners.
ICIEC, Aa3 rated by Moody’s, an affiliate of the Islamic Development Bank Group, is the only Shariah compliant export credit and investment insurer in the world and the leading insurer of credit & political risk in the MENA region. With an objective to increase the scope of trade transactions and facilitate and encourage the flow of FDI to its 41 member countries. ICIEC has insured over $17 billion worth of exports, since 1994, in petrochemical, oil, textiles, food, agriculture and infrastructure sectors.