The World Bank Group’s Multilateral Investment Guarantee Agency (Miga) is providing investment guarantees worth US$72mn for a project that involves the development of natural gasfields in
- Mozambique, as well as the construction of a central processing facility and an 865km cross-border gas pipeline from Mozambique to South Africa.
Miga’s guarantee coverage is being extended to the Sasol Limited Group of South Africa for its equity investments in Mozambique’s Sasol Petroleum Temane Limitada and the Republic of Mozambique Pipeline Investment Company Ltd. The coverage protects the Mozambican part of the transaction against the non-commercial risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
“We are delighted to be offering support to a project that we expect to have a very high development impact in one of the world’s poorest countries,” says Miga’s vice-president for underwriting, Roger Pruneau. “In addition, this project meets a number of important goals set out by the Nepad initiative namely, the development of Africa by Africans, as well as critical infrastructure development.”
The project which also supports of Mozambique’s development strategy of promoting private sector development is expected to:
- Help develop regional natural gas markets and enhance regional trade and stability contribute to the Mozambican economy by providing significant revenues over the project’s expected 25-year life.
- Provide contracting opportunities for Mozambican and South African companies.
- Create hundreds of jobs for local residents during project construction.
- Contribute to infrastructure development through the addition of roads, removal of landmines, and so on, in the project area.
Miga’s guarantee was a key component in allowing the transaction’s financing to go ahead, says Sasol’s executive director, Pat Davies. “Sasol is pleased to welcome Miga as one of our partners in the development of one of the most important projects in Southern Africa. The guarantee is an important element in our risk mitigation strategy.”
Since becoming a member of Miga in 1994, Mozambique has hosted five projects supported by the agency, totalling US$190mn in guarantee coverage. The Sasol project brings total coverage to US$262mn. Mozambique ranks ninth in terms of Miga’s outstanding coverage. Excluding the Sasol project, Miga has facilitated an estimated US$1.6bn in FDI in the country to date.