IDB, ADB sign $4 billion co-financing accord

IINA – IDB, ADB sign $4 billion co-financing accord

The Islamic Development Bank (IDB) and Asian Development Bank (ADB) signed a landmark co-financing agreement which will allow them to work together on projects in common member countries (Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan). The agreement calls on both organizations to provide up to $2 billion equivalent each over the next three years to finance projects in their common member countries. The agreement, the first of its kind, is based on a three-year business plan that includes a common vision, strategic framework, and best practice ideas in development financing, IDB said in a statement yesterday.

The co-financing will mainly target transactions in the infrastructure (including irrigation), utilities, and urban sectors. However, it may also cover education, health and other sectors in selected countries. “This agreement is unique, timely and in line with the Accra High Level Forum and other international declarations on development effectiveness and harmonization”, said Vice President Cisse of the Islamic Development Bank.

“In addition, this agreement provides a new platform form which both institutions will attempt to raise third party funds for investments in the common member countries. This is a breakthrough in collaboration between international financial institutions”, said Juan Miranda, director general of the Central and West Asia Department of the Asian Development Bank.

…Separately, another MoU was signed between the Turkish International Cooperation and Development Agency (TIKA) and the Islamic Development Bank Group on Sunday formulating a comprehensive agreement of cooperation between the partners in promoting economic and social development of their common countries…TIKA, acting on behalf of the government of the Republic of Turkey, is dedicated to contributing towards sustainable social and economic development in partner countries through technical cooperation activities and development projects. Given the similar realm of visions of both institutions, the partnership between IDB and TIKA aims to better facilitate development in their member countries.


South Korea, Indonesia sign deal on fuel from seaweed

IINA – South Korea, Indonesia sign deal on fuel from seaweed

South Korea has signed an initial deal to lease 61,750 acres of Indonesian coastal waters to grow seaweed for bioethanol fuel, it was announced today. The letter of intent was signed between the Ministry for Food, Agriculture, Forestry and Fisheries and its Indonesian counterpart.

Yonhap news agency said the seaweed would be used to make commercial pulp products and bioethanol, a more environmentally friendly fuel used in internal-combustion engines either in pure form or as an additive.

Property developers turn to Islamic alternatives

Zawya – Property developers turn to Islamic alternatives

In an increasing tough financial world hammered by the global credit crisis, more property developers are turning to Islamic financial instruments to get projects off the ground, say the organisers of the Islamic finance industry’s leading global event.

“Financing based on Islamic rules requires that gains are derived from ethical, shared investment rather than being interest-based; hence it has sidestepped the credit crunch,” said Swati Taneja, conference director of the twice-yearly International Islamic Finance Forum that next takes place in Istanbul from 13 -17 October 2008.

“The downturn in the international property markets has hit conventional realty firms as investors scale back their exposure, especially in highly leveraged markets,” she added.

“There are many new examples emerging of developers worldwide adopting the Islamic model to finance their projects,” said Taneja. “One of the most recent is South East Asia’s biggest property developer, based in Singapore, which hopes to issue the first tranche of a $700 million Islamic bond by the end of this year – with Middle East investors as the main target.

“There are few competitive sources of finance available in the conventional financial world right now. Meanwhile, there are billions of dollars in the Middle East Islamic financial sector looking for investment. But, increasingly, unless developers structure their projects to be Shari’ah compliant they won’t get a second look.

…”In recognition of the highly competitive alternative now provided by Islamic finance to conventional interest-based structures, the forum this year features a special workshop on structuring Islamic real estate deals.”

…For more details about the 2008 International Islamic Finance Forum in Istanbul, please visit:

Arab-based group takes management of Pakistani electricity company

Zawya – Arab-based group takes management of Pakistani electricity company

The Dubai-based AbraajAbraajLoading… group of companiees Tuesday took over management of the Karachi Electric Supply Company (KESC) from the Saudi Aljomaih group following finalization of a deal through which the Saudi company offloaded 50 per cent of its 73 per cent shares and management in the utility.

The company has pledged to dole out 400 million dollars to the government, which to some extent relieved pressure on its budget-makers.

The company is taking charge of KESC at a time when it has suffered huge losses, borne out by the financial statement of the company for 2007-08. During the period transmission and distribution losses were 30.80 per cent.

The KESC, after its two and half year of its privatization, has only shown decline in its performance, and practically driven a direction where it was feared to be sliding rapidly in the black hole.

Presently there is not a single asset of KESC which has not been mortgaged. Even large Industrial customer’s accounts are mortgaged to the generating company to whom the payments of such customers are directly being debited. The KESC is suffering a shortage of 350 MW which had forced the utility to persist with outages which in many areas of Karachi are extended up to nine hours at a stretch.

Islamic debit card to be rolled out across Russia

MoscowNewsWeekly – Islamic debit card to be rolled out across Russia

The new Islamic debit card promises customers that any interest earned on their accounts will be donated to charitable causes, such as maternity wards for local hospitals. The terms of the card were decided by the bank in cooperation with the Spiritual Council of Muslims in Dagestan, which also helped with the card design to insure its appearance would conform to Islamic law, such as avoiding visual depictions of living beings.

“There are no other banks in Russia offering this kind of service so we had no format to follow, we had to do it all on our own, consulting Muslim leaders every step of the way. But the success of the card shows that there is a demand for this type of service and we are considering expanding into other types of Islamic financial services,” said the spokeswoman.

…Bekkin welcomed the new debit card as a step in the right direction but added that other Islamic financial services such insurance and mortgages are more urgently required than a debit card particularly in the capital.

…One of the biggest obstacles to the development of specialised Islamic financial services in Moscow is the lack of awareness and education among many Muslims about the prohibition on usury. Whereas in Dagestan the principles of Islamic banking are preached by Sufi sheiks to packed-out mosques, the religious leaders in Moscow have far less clout and smaller audiences.

…The card has also received attention from some unexpected quarters since its release in Dagestan: “The card has been surprisingly popular with Christians and Jews in the region, apparently they really like the design,” explained Express Bank’s spokeswoman.

Iraq to host fair for oil giants

Zawya – Iraq to host fair for oil giants

Iraq is to host a giant conclave of the worlds biggest oil companies in London next month in a bid to open its vast reserves to long-term drilling contracts and counter impressions that it aims to shut out Western firms, it was reported here Monday.

Baghdad has invited 41 companies, including Royal Dutch Shell
, BP and Gazprom, to the London fair to prepare for the first round of bidding on the Bazargan, Abu Gharab and Fakka oil and gas fields, The Daily Telegraph newspaper said.

“The oil ministry will unveil the legal framework and conditions for signing service contracts by qualified oil companies”, said a government spokesman.

The contracts will be fee-based.  …It has nudged up production this year to almost 2.5 million barrels per day with fresh supplies from Kurdistan as the security picture improves, becoming a swing player in the worlds delicately balanced market, the paper said.

Oil minister Hussain Al-Shahristani said he hoped to raise output to 2.7 million barrels per day by the end of this year, but the government has sent out mixed signals over the role of foreign companies in the new investment.

Emirates raises $265m in Islamic financing for planes

Zawya – Emirates raises $265m in Islamic financing for planes

Emirates Airline has raised $265 million (Dh973m) in Islamic financing to pay for the lease of two new Boeing 777-300ER aircraft delivered earlier this year.

The transaction involves long-term leases for a period of 12 years. The first aircraft was delivered in May and the second at the end of August, Emirates said.

The airline said Noor Islamic BankNoor Islamic BankLoading… was mandated lead arranger of the group, which also included Barclays Capital, CCB International Finance, Samba Financial Group and Standard Chartered Bank.Standard Chartered Bank.
was also the facility’s structuring bank, investment manager and investor security trustee.

Brian Jeffery, Emirates’ Senior Vice-President of Corporate Treasury, said: “Islamic financing is an important source of financing for Emirates and we have now raised $1.3bn from this market, including the sukuk bond. Islamic financing provides competitive pricing with flexibility, which are both key elements in our financing strategy.”

The aircraft brings Emirates’ passenger fleet to 111.