Controversial Cairo PPP refinery receives $3.7 billion from World Bank, EIB, EFG Hermes

18 Jun 2012 admin

A refinery expansion inside urban Cairo is receiving hundreds of dollars in "development" lending, despite a popular campaign against construction. The Mostorod Refinery Project – part-owned by private equity firm Citadel Capital – is situated in Northern Cairo, between Shobra El-Kheima and Mostorod. Opposition to the public-private partnership has focused on forced evictions, pollution and diversion of water resources.

On Friday, Citadel Capital announced that it had sourced $3.7 billion for the refinery expansion. Lenders include development finance institutions like the European Investment Bank, the International Finance Corporation (part of the World Bank), the African Development Bank and Dutch & German "development" banks. Export Credit agencies from Japan & Korea also joined in. $462 million of equity were raised by the private equity fund EFG Hermes, which is embroiled in corruption allegations involving Hosni Mubarak's sons Gamal & Alaa, who are now on trial.

Reports have been circulating in Cairo of many people being evicted for the construction work and not being satisfactorily rehoused. Concerns over air pollution causing lung cancer and asthma led to local public opposition. The company is also set to consume an enormous amount of water from the Nile and the Ismailia Canal. Processed water will apparently be pumped back into the Canal – raising fears over the impacts on fish and cattle. The capital-intensive project will apparently provide 600 permanent jobs – seen as negligible given the millions of neighbouring residents living in poverty. Hence the popular campaign called for the refinery expansion to be moved to uninhabited areas.

The Refinery expansion is owned by the Egyptian Refining Company. The largest shareholders include Qatar Petroleum (27.9%), Egypt General Petroleum (23.8%), Citadel Capital (11.7%) and the Inframed Fund (7.5% – itself controversially owned by EFG Hermes and European Investment Bank). Some of the "development" lenders bought long-term equity stakes: the International Finance Corporation (6.4% – World Bank), the Dutch development bank FMO (2.2%) and Germany's DEG (2.0%).

The new Citadel Refinery is being built adjacent to an existing refinery in Mostorod. While the project supporters claim that it will reduce Egypt's dependence on fuel imports, environmental justice advocates are concerned that it entrenches continued reliance on fossil fuels.


A leaflet distributed in Tahrir Square describing the "environmnetal disaster" of the Mostorod Refinery Expansion:

  1. The emissions from this initiative affect areas up to 40 km away. Keep in mind that ‘Ataba Square, located in downtown Cairo, is 13.5 kilometers away; the presidential palace in Heliopolis is 6 kilometers away. This means that catastrophic damage will reach millions of Egyptians residing in the heart of Cairo.
  2. The gas and liquid emissions from this project cause many diseases. These include infertility, lung cancer, stomach cancer, chest allergies, asthma, chronic renal failure, cirrhosis of the liver. They can also lead to death in many cases.
  3. It consumes an enormous amount of water from the Nile, 6,200 cubic meters per hour. It will produce a large quantity of hydrogen sulfide gas, which is the most dangerous toxic gas on Earth. This gas will be released in the Isma’iliyya Canal.
  4. It produces heavy atmospheric emissions that will not only affect the surrounding environment but will also affect environmental change in Greater Cairo. We can only imagine that the emissions will approach 43 tons of carbon dioxide daily.
  5. It dangerously affects the people in the areas surrounding the project (particularly – Mostorod – Bahtim – Shubra al-Khaymah) and the fish and cattle living in and near the water of the Isma’iliyya Canal.
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