EXIM Board of Directors Approves Preliminary Commitment of $452 Million to Support U.S. Power-Related Exports to Iraq
EXIM action boosts the competitive position of a Florida company and could lead to support of an estimated 1,800 American jobs
Washington, D.C. – Today the board of directors of the Export-Import Bank of the United States (EXIM) approved a preliminary commitment for nearly $452 million to Iraq’s Ministry of Finance to support the export of U.S. power-related manufactured goods and services for the retrofitting of a fleet of gas turbines in existing Iraqi power plants. The project will install energy-efficient technology that will alleviate the need to build additional power plants.
A preliminary commitment is a non-binding offer of EXIM financing subject to the award of the export contract and EXIM’s review of an application for a final commitment. Conversion to a final commitment requires authorization by EXIM’s board of directors and is subject to the satisfaction of all conditions, policies, and legal requirements of the agency under its charter and as determined by the board.
EXIM’s approval of a preliminary commitment sends a strong signal to a potential foreign buyer that the agency has conducted significant due diligence of the proposed transaction and indicates the likelihood of providing financing upon receipt of an application for a final commitment that meets all of EXIM’s requirements and the board’s review and approval.
If the transaction reaches final approval, EXIM’s financing would support an estimated 1,800 U.S. jobs in Florida, Georgia, Minnesota, Texas, Virginia, and Wisconsin. The transaction would finance the export of U.S. goods and services by a U.S. exporter, Stellar Energy Americas Inc., in Jacksonville, Florida, that employs 90 plant workers, engineers, and support staff. The EXIM-backed transaction potentially could lead to the creation of 50 new jobs at the company as well as supporting additional jobs at other U.S. suppliers across the country.
The borrower of the EXIM-backed financing would be Iraq’s Ministry of Finance, and the buyer would be the Ministry of Electricity. EXIM’s support is needed because it would enable a private-sector lender to provide a competitive repayment term at an amount beyond what could be offered without the support of an export credit agency. The transaction also supports the $5 billion memorandum of understanding (MOU) between EXIM and Iraq’s Ministry of Finance that was signed in last month.
“President Trump is committed to advancing U.S. trade with Iraq to strengthen the national security, economic growth, and prosperity of both of our nations. EXIM’s preliminary commitment to support U.S. exports and jobs to this important power project will enable an American company to be competitive in securing this contract over foreign competitors and potentially could open the door to extensive additional business for the U.S. power industry in Iraq,” said EXIM President and Chairman Kimberly A. Reed. “It would also be among the first of what we hope will be many transactions under EXIM’s $5 billion MOU with Iraq.
Over the past few months, Chairman Reed met with Iraq’s Deputy Prime Minister and Minister of Finance Dr. Fuad Hussein and Ambassador to the United States Fareed Yasseen at EXIM headquarters in Washington, D.C., to discuss the role that U.S. private enterprise can play in the redevelopment of Iraq, particularly in infrastructure, agriculture, and energy projects. These discussions led to the signing of the $5 billion MOU in October.
“If this transaction reaches final approval, it would signal that EXIM is back and stands ready to enable U.S. companies to participate in Iraq’s reconstruction and provide Iraq with access to high-quality ‘Made in America’ goods and services,” Chairman Reed added.
“If finally approved, this transaction will pave the way for U.S. companies to play a significant role in the rehabilitation of Iraq’s power sector,” said EXIM Board Member Spencer Bachus III. “This transaction would support hundreds of American manufacturing jobs across our country, with great potential for additional growth. It will also help provide jobs in Iraq as that nation rebuilds its infrastructure and moves forward in its economic development.”
“EXIM’s preliminary commitment could lead to a final commitment of financing for this power enhancement system that can improve power output and efficiency by as much as 30 percent,” said EXIM Board Member Judith D. Pryor. “This can be very beneficial in meeting Iraq’s significant electricity needs, particularly when temperatures spike during the summer months.”
EXIM reopened in Iraq in 2003 and has supported short-term U.S. export sales to Iraq, enabling American companies to sell commodities and equipment on repayment terms of up to 360 days through letters of credit issued by the Trade Bank of Iraq. EXIM has supported approximately $400 million in export letters of credit without repayment issues.