IFC’s equity investment will be used by Egyptian Refining Company, a platform company of Citadel Capital, to build a $3.7bn hydro-cracking and coking refinery that will allow Egypt to transform locally available fuel oil into lighter fuel products, such as ultra-low sulfur diesel, for the domestic market.

The company also will help upgrade an adjoining state-owned refinery to increase its energy efficiency and environmental performance, resulting in reduced sulfur dioxide emissions.

Somit Varma, global head of oil, gas, mining and chemicals at IFC, said: “This project has the potential to optimize the use of Egypt’s petroleum product infrastructure, elevate the environmental and social standards within the refining industry, and create significant employment opportunities.”

The investment is part of IFC’s strategy to help enhance development of Egypt’s energy sector. Egypt currently lacks the refining capacity to meet its growing demand for lighter fuels such as diesel and relies heavily on the importation of these products.

The Egyptian Refining investment and such other initiatives will help increase Egypt’s ability to produce fuels domestically and therefore create sizeable savings to the economy through import substitution.