MIGA Supports South African-Mozambican Power Project

MIGA Supports Joint South African-Mozambican Power Project

WASHINGTON, DC, January 13, 2003—The World Bank Group's Multilateral Investment Guarantee Agency (MIGA) said today it is providing investment guarantees worth $72 million for a project that involves the development of natural gas fields in Mozambique, as well as the construction of a central processing facility and an 865 km 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 noncommercial 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," 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 — 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, 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," Davies said, adding that "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, totaling $190 million in guarantee coverage. The Sasol project brings total coverage to $262 million. Mozambique ranks 9th in terms of MIGA's outstanding coverage. Excluding the Sasol project, MIGA has facilitated an estimated $1.6 billion in FDI in the country to date.

For information 
Angela Gentile,
agentile@worldbank.org, t. 202-473-3509