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GIEK can provide a guarantee to cover political risks associated with Norwegian investments abroad, i.e. the risk that the investment will be lost as a result of political action or events. The commercial risk associated with investments, i.e. the risk that the project does not function technically and generate income must be borne by the investor.
The guarantee may cover Norwegian investments abroad in the form of capital, production equipment or other deliveries in kind (for example loans from investors or third parties) in connection with the establishment of a company or participation in financial ventures outside Norway. The investment guarantee can also cover investments in real estate or assets utilised outside Norway. In certain circumstances the guarantee obligations which an investor has entered into in connection with an investment can be deemed as part of the investment itself.
The investment guarantee normally covers one or more of the following types of political risk:
1. Expropriation and confiscation
2. Acts of war, revolution and civil unrest
3. Moratoria, payment embargos or currency restrictions
4. Norwegian or international boycotts or sanctions
In addition, upon specific application and in certain situations, cover can be provided for breach of contract by the authorities in the host country and/or natural disaster.
Guarantee cover can be provided for a maximum term of 20 years and the maximum coverage rate is 95%. To a great extent the guarantee can be adapted to the needs of the investor.
Special arrangements can be made to cover the risk of failure to transfer dividends, proceeds, interest etc. The premium is calculated on the basis of the limit of liability cover GIEK has at any given time and an annual premium rate to be paid in advance which ranges from approx. 0.5% to 2.5% depending on the type or risk, the country in which the investment is made, the type of project etc.
For certain developing countries with a specific, higher risk level requirement GIEK has the developing country scheme.
For larger investments and in cases involving international funding (for example via EBRD, IBRD, regional development banks etc.) GIEK can provide an investment guarantee in collaboration with other guarantee institutions. In such cases the terms and conditions of the policy will be adapted to the specific project and the respective investor.
Investment guarantee
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Covers political risks associated with investments outside Norway. The guarantee may cover Norwegian investments abroad in the form of equity capital, borrowings, production equipment or other deliveries in kind in connection with the establishment of a company or participation in financial ventures outside Norway. This guarantee scheme is restricted to political risk.
