Making it easier to finance scrubbers

Inventor Chemical Tankers AS is the first customer to use Export Credit Norway’s framework credit agreement for retrofitting scrubbers on their vessels.

Inventor Chemical Tankers AS is the first customer to use Export Credit Norway’s framework credit agreement for retrofitting scrubbers on their vessels.

The shipping company, which is headquartered in Bergen, plans to retrofit scrubbers aboard its entire fleet of seven 19,000-tonne chemical tankers.

The scrubber retrofit project can utilise export financing from Export Credit Norway because the vessels are used in foreign trade. The equipment is due to be fitted in the course of 2019, at a shipyard in China that has been approved by Export Credit Norway and GIEK. The vessels were all built in the period 2015 to 2017.

Facts about new sulphur emissions requirements
The International Maritime Organization (IMO), of which most UN member states are also members, has decided to cap the sulphur content of fuels used by ocean-going ships at 0.5% from 2020 onwards, down from 3.5% at present. In principle, shipping companies will therefore be forced either to switch to cleaner, more expensive fuels or to install systems that scrub sulphur from exhaust gases.

The exporter is Lysaker-based Clean Marine AS, which began developing scrubbers in 2005. The delivery comprises the company’s newly-developed CleanSOx Compact exhaust-gas cleaning system. The system is characterised by its reduced size and weight compared to the first-generation of the product. The purpose of having different system versions is to secure flexibility with regards to differing ship configurations and sizes.

“Clean Marine should be praised for the existence of this framework credit agreement . The company was very proactive in securing the sale agreement with Inventor Chemical Tankers, which liked our financing solution,” says Export Credit Norway’s Senior Vice President,  Laila Johnsen.

Photo: Inventor Chemical Tankers

Integrated into existing loan facility

The framework credit agreement totals approximately USD 10 million, and will be disbursed in several tranches as equipment is delivered to the seven ships. Inventor Chemical Tankers has integrated the credit agreement into its existing loan facility with the banks that financed the seven chemicals tankers.

“It is often unproblematic to integrate a new framework credit agreement into a customer’s existing loan facility, provided that the lending banks are robust,” says Laila Johnsen, who also points out that Inventor Chemical Tankers has secured competitive financing for its purchase from Clean Marine.

“The framework credit agreement provides for disbursement of the loans in several tranches, mirroring the various equipment deliveries. However, the actual loan agreement was entered into in 2017, when Inventor Chemical Ta nkers signed the contract with Clean Marine. At the time, we offered the company a CIRR loan at a fixed rate set by the OECD. Since then, US interest rates have skyrocketed, and it is precisely when interest rates are rising that a CIRR fixed-rate loan is favourable. Personally, I am very pleased that a shipping company has secured highly competitive financing by being quick to accept its environmental responsibility and tackle the problem of sulphur emissions,” says Laila Johnsen.

Satisfied borrower

The borrower, Inventor Chemical Tankers, is satisfied with the financing solution arranged through Export Credit Norway.

“We are very pleased with the financing package we have been able to put together with the help of Export Credit Norway and GIEK. Both the process and the dialogue with the two agencies and our existing lenders were positive,” says Inventor Chemical Tankers CEO   Øystein Elgan.

First transaction for Clean Marine

This is the first time a Clean Marine customer has opted for export financing to fund   equipment deliveries. However, this will not be last time Clean Marine offers a customer export financing.

“Securing financing for scrubber retrofits has proven difficult, given the relatively large investment required in terms of both equipment and installation. Export Credit Norway’s competitive solution is very welcome. We plan to continue using export financing as a sales tool going forward,” says Clean Marine AS CEO Nils Høy-Petersen.

Financing for 85% of the contract value

Export Credit Norway can finance up to 85% of the contract value of retrofit equipment purchased from a Norwegian exporter by an international shipping company or Norwegian shipping company deploying vessels in international trade. The Norwegian component of the contract must total at least 30%.

Shipping companies may also apply for a framework credit agreement to finance retrofits of on-board ballast-water treatment systems.

Kontakt oss
Laila Johnsen
Laila Johnsen Ocean Industries +47 920 48 936 +47 920 48 936
Olav Einar Rygg
Olav Einar Rygg Head of Lending +47 995 85 074 +47 995 85 074