GLASGOW, Scotland — Britain’s export-credit agency, U.K. Export Finance, is unable to match the low-interest loans for satellite projects that its U.S., French, Canadian and Japanese counterparts offer because of national regulations that forbid interference with the private sector, a U.K. Export Finance official said July 16.
Addressing the U.K. Space Conference here, Jon Boyce said the agency is working to loosen rules that up to now have left the agency a bystander as more-aggressive agencies in North America, Europe and Asia battle to defend their domestic industry in satellite export competitions.
Boyce, an export finance adviser at the agency, said that while all export-credit agencies operate under commonly accepted principles overseen by the 34-nation Organization for Economic Cooperation and Development, the British government goes even further.
In many cases, he said, loan guarantees will be refused if the lender — for example, a satellite purchaser weighing offers from Britain and elsewhere — has access to conventional bank financing. “Only when the banking sector has said no will we give a bank guarantee,” Boyce said, adding that the agency is gradually moving in the direction of a more active export-support role. “But it’s not quite there yet, and we do operate in a more restrictive environment. We are not allowed to distort the private sector. It will be a big cultural change for us.”
A U.K. Export Finance guarantee may be refused if the project in question is occurring in a rich nation.
In recent years, financially healthy companies including satellite operatorsof London and of Luxembourg have used export-credit agency financing from the United States and France to trim a few points from their interest rate obligations.
One British satellite industry official said his government’s refusal to play in the same league as the U.S. Export-Import Bank, France’s Coface, Export Development Canada and others has likely cost British industry several export contracts.
The industry official said hamstringing U.K. Export Finance with rules that may appear quaint appears at odds with the current British government push on behalf of its space sector as an engine of economic growth.
Exports account for the vast majority of the space sector’s growth potential, said Richard Peckham of UKspace, the national space industry association, and increasing exports is the only way to meet the government’s stated goal of increasing Britain’s space sector revenue to 10 percent of the global total in the coming decade.
In some export competitions, such as the current competition in Brazil among U.S., French and Japanese companies, industry officials say the extent of government support, including low-interest financing, could be the most important single factor in determining a winner.
of the United States, of France and Italy, and Mitsubishi Electric Co. of Japan are vying to build civil-military telecommunications satellites for the Brazilian government. But the contract is expected to lead to a broader collaboration between the winning company and the Brazilian government in areas including satellite Earth observation.
Philip Davies, business development manager at Surrey Satellite Technology Ltd. of Britain, which has sold small satellites to perhaps more governments than any other company, said the British government’s export regulations need to move faster.
Addressing the conference, Davies said the technology for Earth observation and other space systems is advancing so fast that what was cutting-edge and sensitive from a military point of view five years ago has now become consumer off-the-shelf in many cases.
“We need a more responsive licensing system,” Davies said. “The licensing system needs to understand the pace of change in the space industry. As it is now it does not always keep up with that market.”
Tim Cooper, military adviser on cyber and communications to the British Defence Security Organisation, said current export regulations on space equipment run to 334 pages and are extremely specific on what is allowed. But for most of the licenses needed to export such goods, he said, it is the Foreign Commonwealth Office, not the Defence Ministry, that is the licensing authority.
Speaking of export license requests generally, he said only 2-3 percent are turned down per year on average, suggesting that companies are aware of what the restrictions are.