Mozambique
Development of Mozambican gas fields financed

afrol News, 19 January - Mozambique has received investment guarantees worth US$ 72 million for a project that involves the development of natural gas fields in the country, as well as the construction of a central processing facility and an 865 km cross-border gas pipeline from Mozambique to South Africa. This will open up a totally new industry in the country.

The World Bank's Multilateral Investment Guarantee Agency (MIGA) last week approved the guarantees, necessary for the sector to be established. 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 Mozambique Pipeline Investment Company Ltd. "The coverage protects the Mozambican part of the transaction against the noncommercial risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract," MIGA states.

- 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, said 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 is expected to help "develop regional natural gas markets and enhance regional trade and stability," according to a MIGA statement. It was further to contribute to the Mozambican economy by providing significant revenues over the project's expected 25-year life and to provide contracting opportunities for Mozambican and South African companies.

The gas development project was further sure to create hundreds of jobs for local residents during project construction and "contribute to infrastructure development through the addition of roads, removal of landmines, and so on, in the project area," MIGA said.

MIGA's guarantee was a key component in allowing the transaction's financing to go ahead, said 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," Mr Davies said, adding that "the guarantee is an important element in our risk mitigation strategy."

Sources: Based on MIGA and afrol archives

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