Korea Eximbank to Provide $250 Million in EDCF Loans to Egyptian Railway Modernization Project

Korean Eximbank Chairman Bang Moon-kyu poses for a commemorative photo with the head of the National Authority for Egyptian Railways Mostafa Abou Elmakarem after signing a loan agreement in Cairo, Egypt, on Jan. 21. (Photo: Korean Eximbank)

The Export-Import Bank of Korea (Korea Eximbank) has decided to provide $250 million to help modernize Egypt’s railway infrastructure.

Korea Eximbank announced on Jan. 23 that it has signed a loan agreement to provide a total of $250 million in EDCF loans to support the Luxor-High Dam Railway Modernization Project in Egypt.

Korea Eximbank has been entrusted by the Ministry of Strategy and Finance to operate and manage the Economic Development Cooperation Fund (EDCF) for developing countries since 1987.

It provides long-term low-interest loans to support industrial development and economic stability in developing countries, and promotes economic exchanges between developing countries and Korea.

Korea Eximbank Chairman Bang Moon-kyu signed the loan agreement with the head of the National Authority for Egyptian Railways Mostafa Abou Elmakarem in Cairo, Egypt, on Jan. 21.

The Egyptian railway modernization project is a large-scale national project aiming to upgrade the existing aged transportation network (5100 km, Alexandria-Cairo-High Dam Railway) that runs through the country along the Nile River. The Luxor-High Dam section is the last stage of the project.

The $250 million EDCF loans will be used to modernize railway signaling systems, the largest volume ever extended for railway projects so far.

This support will help digitize the railroad systems for higher safety, preventing accidents and improving on-time operation.

This will in turn increase user trust and satisfaction, as well as strengthen their capacities to respond to climate change with efficient energy use.

In addition, along with Korea Eximbank’s support, small-and medium-sized Korean companies in the railway system industry including those manufacturing ICT equipment will be able to further expand their entries into the African market, many industry analysts believe.

“It is meaningful that Korea’s advanced IT technologies for the latest railway signaling systems can contribute to preventing chronic railway safety problems while ensuring stable and efficient railway operation in the country,” Chairman Bang said.

“We hope that this will expand opportunities to cooperate with the Egyptian government in various promising fields such as digital and green-based transportation and energy.”

Prior to this, Korea Eximbank signed a memorandum of understanding with the Ministry of International Cooperation on Jan. 20 to provide a total of $1 billion worth of finance over the next five years to facilitate cooperation in large-scale infrastructure projects in Egypt.

In a related development, Korea and Egypt signed a deal to export the K-9 self-propelled howitzer to Egypt. The contract amount is more than 2 trillion won, the largest ever export of the K-9 self-propelled gun.

Korea Eximbank significantly contributed to this deal by offering attractive financial solutions to the Egyptian government.

The Korean Defense Acquisition Program Administration said on Feb. 1 (local time) that Hanwha Defense signed a K-9 self-propelled gun export contract at the Artillery Center in Egypt with the attendance of key officials from both countries.

This export was made for the first time in Africa after Asia, Europe, and Oceania. Egypt has become the ninth country to deploy K-9 self-propelled guns.

The export was signed after a long-term negotiation between Korea and Egypt for more than 10 years, the Defense Acquisition Program Administration said.

As the contract was not signed during President Moon’s trip to Egypt from January 19 to 21, some experts were concerned that the K-9 howitzer export negotiations might be prolonged.

The Korean government could not accept Egypt’s excessive demand for a price cut. However, Korea Eximbank proposed purchase financing solutions and the Egyptian government accepted it and as such, the deal was finally made.

The Egyptian government will receive 80 percent of the contract price as a loan from Korea Eximbank and pay with the loan and only the remaining 20 percent in cash.

Regarding the success of K-9 exports to Egypt, Park Soo-hyun, a senior presidential secretary for public communications at Cheong Wa Dae said that the contract was finally signed thanks to the Korean government’s excellent negotiation skills and the attractive loan conditions offered by Korea Eximbank.