Maputo — The World Bank's Multilateral Investment Guarantee Agency (MIGA) announced on Monday that it is providing investment guarantees worth 72 million US dollars for the development of the natural gas fields in the southern Mozambican province of Inhambane, including the construction of a central processing facility and the 865 kilometrer gas pipeline from Inhambane to Secunda in South Africa.
According to a MIGA press release received by AIM on Wednesday, MIGA's guarantee coverage is being extended to the South African petro-chemical company Sasol for its equity investments in Mozambique's Sasol Petroleum Temane Limitada and the Republic of Mozambique Pipeline Investment Company Ltd. This 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," said MIGA's Vice President for Underwriting, Roger Pruneau, cited in the release. "In addition, this project meets a number of important goals set out by the NEPAD (New Partnership for Africa's Development) initiative - namely, the development of Africa by Africans, as well as critical infrastructure development." The MIGA guarantee was a key component in allowing the transaction's financing to go ahead, said Sasol 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." Mozambique joined MIGA in 1994, and since then five projects in the country have benefitted from a total of 190 million dollars in MIGA guarantee coverage. The Sasol project brings total coverage to 262 million dollars. Mozambique ranks ninth in terms of MIGA's outstanding coverage.
MIGA says that, excluding the Sasol project, MIGA has facilitated an estimated 1.6 billion dollars in direct foreign investment in the country to date.
MIGA was set up in 1988 to encourage foreign investment into developing countries by providing non-commercial risk insurance.
Since its inception, MIGA has issued more than 600 guarantees for projects in 82 developing countries.
