Financing investments in infrastructure is part of our core business. We finance seaports around the world, contributing to the development of transport infrastructure.
An example of our commitment to developing transport infrastructure is the financing of a container terminal for the port of Santos in Brazil. KfW IPEX-Bank provided USD 97 million in the form of project financing to build and operate the container terminal. The construction measures carried out as part of the project included the building of a 1,108-metre-long quay with a total of three berths and a water depth of 15 metres, as well as the allocation of a 44-hectare area intended for a container yard. The new terminal was opened at the end of 2013.
Six commercial banks as well as the International Finance Corporation (IFC), a member of the World Bank Group, participated in the outside financing for the project, which totalled USD 679 million. This financing took the form of an “A/B loan”, in which the IFC is the lender of record (A loan) whilst the remaining banks enter into a contract with the IFC as B lenders. The involvement of the IFC also reduces political risks for the other banks.
The sponsors of the project are two well-respected European port operators: APM Terminals (port operation arm of the world’s largest shipping line, AP Moller Maersk) and Terminal Investment Limited (port operation arm of the world’s second-largest shipping line, MSC), each holding a 50 per cent share through their respective holding companies in the project company, BTP (Brasil Terminal Portuário S.A.). Both sponsors have been working in Brazil for a number of years now. The project company holds a 20-year concession contract with the Brazilian port authority, which can be extended for an additional 20 years. The revenue that comes from operating the terminal will cover interest payments and debt servicing in full.
Financing this project allows KfW IPEX-Bank to support European products and services, thereby fulfilling one of its core responsibilities. For example, part of the preparatory and excavation work for the construction of the wharves was undertaken by a Belgian firm, and several German exporters (including Siemens) supplied the electrical equipment for the terminal.
Santos is Latin America’s largest port, and the primary container port for the mega-city of São Paulo and its 20 million inhabitants, about 65 kilometres away. Given that about a quarter of Brazil’s foreign trade comes through this port, the new container terminal will play a key strategic role in the region. Equipped with state-of-the-art technology, the container terminal has a good chance of holding its own against competition within the port on a long-term basis.
An additional positive impact of the project is the total renovation of the landfill site which was located in the port area for 50 years, along with a clean-up of the contaminated soil. These additional measures meet the environmental and security criteria of the World Bank.
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