The United Kingdom’s export credit agency, UK Export Finance, is actively seeking to participate in an increased number of satellite projects. However, the institution is struggling to find enough UK-based deals to back.
Speaking at the London…
The United Kingdom’s export credit agency, UK Export Finance, is actively seeking to participate in an increased number of satellite projects. However, the institution is struggling to find enough UK-based deals to back.
Speaking at the London Satellite Finance and Industry Conference on 8 February, John Snowdon, head of business division 2, civil and defence projects at UK Export Finance, said that the ECA has worked hard to develop a comprehensive range of financing support but is finding it difficult to indentify suitably germane projects.
“We are now in product terms fully competitive with the likes of Coface… We have been proactively engaging with the industry over the last couple of years and are trying to work out how we can help,” argued Snowdon.
He added that UK Export Finance, which was previously called the UK Export Credits Guarantee Department, has sought to participate on certain Coface-led financings for satellite projects but the French ECA has not necessarily accepted the offer. Last year, UK Export Finance provided €100m of reinsurance to Coface in support of a satellite contract.
One of the biggest issues for UK Export Finance is that unlike its French and US counterparts there is not a significant satellite systems manufacturing sector in the country. While Surrey Satellite continues to successfully build on its small satellite expertise and EADS Astrium, which also owns SSTL, constructs certain parts of its satellites via its UK operations, neither of these have tended to participate on the bidding process for the large satellite projects that have tapped ECA financing in recent years.
Snowdon said, “Legally our support has to be connected to a UK export contract. We would be delighted to get into a similar position as Coface but many of the UK space manufacturing companies are subsidiaries.”
The move by UK Export Finance is part of a wider push by the UK government to try and provide more support to its commercial space sector. In a keynote address at the London Satellite Finance conference, Lord Green, the minister for state for trade and investment, underlined the government’s determination to back the industry.
Green stated: “We recognise that this is an industry that needs clear governmental support. We need to get hi-tech developments to the market earlier.”
The UK space industry currently generates approximately £7.5bn a year and is growing at over 9% annually. Last year, the UK chancellor George Osborne outlined the governmental target of capturing 10% of the global space market by 2030. This would mean the UK space sector would bring in revenues of approximately £40bn annually and employ more than 75,000 people.
To achieve this, though, the UK state need to invests more in the industry, says Ruy Pinto, chairman of UK Space and CTO of Inmarsat. Pinto points out that based on the last available figures (from 2008), the UK is ninth in the world in terms of government expenditure on space. To that end, the state should increase its support both as by acting as a rational buyer when it is customer and by providing greater funding for both research and development and strategic programmes.
For its part, over the past year a number of significant changes have been implemented in the UK space sector with the establishment of the UK Space Agency to pool and allot funding and the creation of a £40m international space centre at the Harwell Science and Innovation Campus.
Pinto also argued that the government could help by creating a far more amenable regulatory environment, in order to foster a ‘level playing field’. This includes amending the Outer Space Act to remove an unlimited liability on operators, speeding up licensing procedures and clarifying the role of communications regulator Ofcom, which has in the past focussed too much on the consumer and not enough on helping the UK space industry compete internationally.
Joanne Wheeler, partner at law firm CMS Cameron McKenna, which organised the event, commented: “The space and satellite industry is a little known UK success story. We are fortunate in this country to have depths of expertise across the sector; this conference was an opportunity to explore ways for government and private business to further their co-operation in this vital industry.”
