Investors in an Egyptian petroleum refinery project, led by Citadel Capital and Qatar Petroleum, have secured $ 3.7bn in financing for the facility, the project operator said yesterday.

The financing, put together by private equity firm Citadel, includes a $ 1.1bn equity investment and is backed by a $ 2.6bn debt package, Egypt Refining Company (ERC) said in a statement. Project partners include the Egyptian government.

The ERC project is to produce more than 4.1 million tonnes of refined products and oil derivatives annually, including more than 2.3 million tonnes of Euro V diesel per year. This is expected to cut Egyptian diesel imports by up to 50 percent.

The ERC said the refinery, on the outskirts of Cairo, will contribute $ 300m in direct benefits to the state and create jobs. It is set to start operating in 2016. '(The project) will reduce present-day diesel import needs by 50 percent, improve air quality in the Greater Cairo Area (and) help reduce Egypt's annual subsidy bill,' ERC said.

A series of attacks on the natural gas pipeline that runs from Egypt to Israel has cut off supplies to the region and have forced Egypt to seek more fuel from abroad to meet rising demand from power generation and fuel needs for heavy vehicles.

Egypt's military rulers have sought to hike diesel imports as fuel shortages in central Cairo this year have caused long queues at petrol stations and traffic jams in some main thoroughfares, angering the public.

In its latest tender, Egyptian General Petroleum Corp (EGPC) was seeking to buy more than 1 million tonnes of gasoil, or diesel, from July to September, worth around $ 1bn — almost as much as it sought in the preceding six months.

Under the financing package for the refinery, EGPC has invested $ 270m for a 23.8 percent interest in the project while Qatar Petroleum International committed over $ 362m for a 27.9 percent stake, the statement said. Citadel has directly and indirectly invested over $ 155m and holds an equity stake of 11.7 percent.

Other participants include Gulf Arab investor, the World Bank’s financing arm, the Netherlands’ development bank FMO, Germany's private-sector lender DEG and European Investment Fund’s InfraMed Fund.

EFG Hermes Investment Bank acted as placement manager for the equity component. The financing is backed by a $ 2.6 billion debt package arranged by ERC's financial advisor, French bank Societe Generale and made up of senior and subordinated debt issued to Asian and African development agencies and banks.