Financing support by Export Credit Agencies (ECAs) for infrastructure projects is turning out to be a saviour in the GCC markets.

A combination of banking financing – both conventional and Islamic – and ECA funding is proving to be the way forward for project clients in the UAE, Kuwait, Bahrain and Oman where schemes since the beginning of last year have seen increasing participation by ECAs.

Some of the ongoing funding transactions in the UAE have large ECA components. Dubai’s $2.9bn Route 2020, has a debt component of $2.5bn, of which about $1.5bn is backed by ECAs.

Oman is sounding out to Asian and European ECAs to fund its refinery project. Duqm Refinery & Petrochemical Industries Company in December issued preliminary information memorandum (PIM) to selected financiers. The 230,000 barrel-a-day refinery is Oman’s third and is expected to be the largest project financing in the sultanate.

Kuwait National Petroleum Company (KNPC) is also eying a $5bn plus ECA loan and appointed banks in December to raise funding, which is the second tranche of a $10bn financing deal for the country’s Clean Fuels Project.

Bahrain’s Alba, is another industrial conglomerate, which has secured commitments from ECAs and it is moving towards signing deals for multibillion-dollar project that involves building new potline and power station in the kingdom.

Apart from project finance, ECA funding makes up for the bulk of aircraft financing deals in the GCC, home to some of the fastest growing airlines in the world including Emirates, Etihad and Qatar Airways. The regional airlines have more than 1,000 planes on order, worth more than $270bn at list prices and need billions of dollars every year to ensure aircraft delivery.

While the GCC governments develop alternative funding mechanisms with the private sector, ECA will remain the priority sources of funding in the near term.