UHT & Yoghurt Dairy Facility in Central Asia.

Challenge

The sponsor operated a legacy pasteurisation line at 60% of local demand and lost significant share to imports during peak-season shortfalls. Currency depreciation over the prior 24 months had also made imported UHT uncompetitive with a domestic alternative — but only if the plant could be built to international quality standards. The board authorised a greenfield 400,000 L/day UHT and yoghurt facility.

Strategy

A hybrid delivery model was chosen: the process island (UHT sterilisers, aseptic tanks, filling) was tendered as turnkey EPC to a single specialist, while balance of plant (civil, utilities, warehouse) was contracted as multi-contract under the sponsor's PMO. The rationale was: process technology is where wrap-value is highest, and BOP is where the sponsor had strong local execution.

• Process island EPC for warranty and performance guarantee
• BOP multi-contract for local cost advantage
• Interface specification between EPC and BOP frozen at week 12
• Hard-currency invoicing throughout to align with ECA loan

The hybrid rationale follows the framework in the Turnkey vs Multi-Contract guide.

Supplier selection

Three European process suppliers competed for the EPC scope. All three passed diligence; award went to the supplier that combined the strongest local service presence (essential for a 24-month warranty in a Tier 3 country) with the second-lowest price. Global B2B Group remained supplier-neutral throughout.

• 3 EPC bidders after documentary shortlist
• Weighted scoring: technical 35%, service 25%, price 25%, financial 10%, ESG 5%
• Local service presence weighted deliberately for warranty enforceability
• 10-year spares availability contractually guaranteed

Financing

The OECD ECA of the EPC supplier's country guaranteed 80% of eligible equipment and services. Given the country's Tier 3 classification, the ECA structured a Berne-Union political-risk element into the guarantee. Payment mechanics were built around a confirmed letter of credit and milestone-linked payments — no advance payment beyond a bank-guaranteed 15%.

The payment architecture followed the Currency & Payment Risk framework. Structural context on the Export Credit Agencies pillar.

Execution

The Incoterm was FCA at supplier premises — the sponsor's freight team ran consolidated freight from Europe via a Black Sea port. FAT covered the aseptic filling line at contract throughput on water and product simulations. Site commissioning ran 6 weeks longer than plan due to imported-utility-transformer clearance issues; the ECA loan grace period accommodated the delay without covenant breach.

• FCA Incoterm allowed sponsor to consolidate freight and cut ~9% on landed cost
• FAT on aseptic filler closed 6 NCRs pre-shipment
• Utility transformer clearance delayed hot commissioning by 6 weeks
• ECA grace period absorbed the schedule slip

The Incoterm decision references the Incoterms in Practice guide.

Lessons learned

• Hybrid delivery worked because the interface between EPC and BOP was specified BEFORE either award.
• Weighting service presence equal to price protected the sponsor when the utility issue arose — the supplier had local hands on-site inside 48 hours.
• FCA Incoterm with buyer-controlled freight saved meaningful landed cost on repeat consolidated shipments.
• Bank-guaranteed advance payments were non-negotiable and enabled by early ECA engagement — worth the two extra months in structuring.
• The ECA grace period turned out to be the most valuable financing feature — worth more than a marginal rate improvement would have been.

Executive takeaways

• Hybrid EPC + BOP is powerful when the interface is drafted upstream and the sponsor has strong local execution capability.
• Weight service and warranty enforceability in supplier scoring — not just price and technical fit.
• Buyer-controlled freight under FCA typically beats supplier-arranged freight on repeat corridors.
• Design payment mechanics to protect both sides — bank guarantees on advance payments are the norm, not the exception.

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