WASHINGTON, D.C., June 21 -- The International
Finance Corporation (IFC) has approved financing of up to US$14 million
in Basic Petroleum International Limited, Central America's biggest oil
producer, which is listed on the NASDAQ National Market System in the United
States. The IFC financing consists of a loan of up to US$10 million and
an equity investment of US$4 million in the company. IFC, which has already
disbursed its equity investment and now holds a 5 percent stake in the
equity of Basic Petroleum, is also arranging a syndicated loan of up to
US$6 million from international commercial banks. The project will cost
an estimated US$33 million and will help the company expand its oil production
by 30 percent, from the current level of 8,500 barrels per day (bpd) to
a peak of 11,200 bpd. Basic Petroleum will also construct a 120-kilometer
oil pipeline with a capacity of 10,000 bpd to transport crude oil from
its Xan field in northwest Guatemala, which produces 80 percent of the
company's current output,
to its mini-refinery at La Libertad. The oil is presently transported by
truck at high cost. The new pipeline will help the company save more than
US$5 million annually in trucking costs. "The project will make Basic
Petroleum a more competitive oil producer by lowering its production and
transportation costs," notes Mr. M. Azam K. Alizai, Director of IFC's
Oil, Gas, and Mining Department. "It will also mitigate the adverse
environmental impact of the company's extensive trucking operations, especially
the high levels of dust and emissions." IFC is a member of the World
Bank Group and is the largest multilateral source of equity and loan financing
for private sector projects in developing countries.
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