Arab Petroleum Investments Corporation (Apicorp), a multilateral development bank in which Qatar owns 10% stake, has signed a trade finance risk cover with Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
The documentary credit insurance policy (DCIP) will help Apicorp effectively manage risks affecting its letter of credit (LC) transactions and LCs of petroleum products exports of members in ICIEC, a member of the Islamic Development Bank (IDB) group.
The DCIP is an effective tool to mitigate risk of non-payment of LC arising from a variety of factors, which 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.
“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,” Ahmad bin Hamad al-Nuaimi, chief executive and general manager of Apicorp, said.
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, according to Abdel-Rahman El-Tayeb Taha, CEO of ICIEC.
Apicorp, which 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, has rapidly grown its trade finance and structured commodity finance activities over the last three years, complementing its historically strong project finance franchise.
With an objective to increase the scope of trade transactions and facilitate and encourage the flow of foreign direct investment to its 41 member countries, ICIEC has insured over $17bn worth of exports, since 1994, in petrochemical, oil, textiles, food, agriculture and infrastructure sectors.
