EXIM’s Engineering Multiplier Program (EMP) is designed to generate additional exports of U.S. goods and services overall (the "multiplier effect"), since the foreign buyer is more likely to procure U.S. equipment and construction services for a project for which U.S. engineers, designers, architects, and environmental analysts undertook the feasibility study, design, and other pre-project work.
The EMP will finance feasibility studies, pre-construction design, engineering, architectural and environmental services undertaken prior to commencement of the implementation phase of a physical project, supporting the award of major equipment supply and construction contracts, and development of technical and environmental & social information that are required to facilitate EXIM’s future consideration of requests to support the implementation of foreign projects. Tiffin Caverly, Vice President of the Engineering & Environment Division within the Office of Board Authorized Finance at EXIM, was interviewed about the program.
Q: Is the Engineering Multiplier Program primarily for services providers?
Tiffin – Yes, the EMP program supports front-end technical services, both engineering and environmental in nature, that are related to pre-project development activities. Because we view the products of these pre-project services as having a “shelf-life” that is relevant to the evolution of the underlying project, we are able to offer term financing. Examples include feasibility studies, Front-End Engineering Design (FEED) studies, and Environmental and Social Impact Assessments (ESIAs), as well as tasks such as the survey work that is required to produce these studies. Once these analyses are completed, they may be utilized immediately, or if priorities in the foreign market change in reaction to regional or world events, they may be shelved for a year or more and still retain their value once project development resumes. While these services are not related to project implementation, they are needed to design a project and facilitate the due diligence that would be required for a lender to subsequently authorize financial support for the construction of the project.
Q: Beyond direct support of pre-project technical services, what other benefits does the EMP carry?
Tiffin – There are a variety of additional benefits. From a financing perspective, in the event EXIM does provide construction phase financing, any amounts left to be repaid from the Medium-term EMP transaction can be rolled into the Long-term project financing. From a processing perspective, because EMP activities are limited to pre-project services rather than implementation of a physical project, the due diligence process is simplified, and EXIM can typically process EMP requests relatively quickly. This allows funding to flow and progress to be made sooner. Should the U.S. exporter be successful in winning the construction phase contract and EXIM is asked to finance the goods and services procured from the U.S., we are likely to have a strong set of supporting documents on which to base our due diligence of that follow on request because they will have been prepared with our guidance. Ultimately though, the EMP is meant to build business relationships. The U.S. exporter has an opportunity to build trust and a stronger working relationship with the foreign buyer as they compete for the construction phase contract. At the same time, the foreign buyer has an opportunity to build a relationship with EXIM, which can pay dividends for the underlying project opportunity as well as future opportunities for U.S. exporters.
Q: How does an applicant qualify for the Engineering Multiplier Program?
Tiffin – A member of EXIM’s Engineering and Environment team will review the application. It’s important for us to ensure the services are for up-front project work and that there are no “fatal flaw” issues for which a reasonable resolution would not be available with the proposed project. We also need to confirm that the potential for significant follow-on procurement of U.S. goods and services exists should the project ultimately go forward – either $10 million or twice the amount of financing at the EMP level. Additionally, EXIM’s standard eligibility criteria, such as the Content policy that ties our support to the use of U.S. service providers, applies as it does in our standard programs.
Q: Have there been any recent changes to the program?
Tiffin - Applications for support of greater than $25 million, including any local cost support, are subject to review and authorization by the Bank's Board of Directors. Previously, the threshold was $10 million.
Q: Who should prospective applicants speak with about the program for more information?
Tiffin – EXIM’s Engineering & Environment Division can provide additional information, as can Loan Officers within EXIM’s Structured and Project Finance and Global Infrastructure Divisions, who underwrite project related transactions.
To speak with a member of EXIM’s Engineering and Environment Division about the Engineering Multiplier Program, please call (202) 565-3556. For information about EXIM’s other programs, please click here to schedule a consultation request with a trade finance specialist.