WASHINGTON D.C., February 12, 2004
—The International Finance Corporation, the private sector arm of the World Bank Group, today formally announced an $18.5 million equity investment in a joint venture with Sasol Ltd. and ENH, Mozambique’s national petroleum company, to develop natural gas resources in the country’s Inhambane Province.
Led by sponsor and operator Sasol of South Africa, the project will develop two natural gas fields, a central processing facility, and a 900-km pipeline linking the fields in Mozambique to Secunda, South Africa. It also includes the conversion of the Sasol gas distribution network and the shift from coal fuel to gas as a feedstock for chemical plants.
IFC will take a 5 percent stake in the upstream portion of the project, the development of the gas fields and the central processing facility. Sasol Ltd. will hold 70 percent, and CMH, a subsidiary of ENH, will hold 25 percent. The World Bank and MIGA also participated in the project by providing guarantees to private investors for both the upstream and the pipeline portions.
Rashad Kaldany, director of the World Bank Group’s Oil, Gas, Mining, and Chemicals Department, said that “to enable Mozambique to reap both economic and social benefits, the project will promote local participation and ensure the presence of Mozambican investors in the transaction.” ENH chairman Issufo Abdulla added that “what is unique about this project is that IFC’s participation ensures that Mozambicans will have an ownership stake in it.”, while Castigo Langa, Mozambique’s minister of mineral resources and energy, noted that “the project will also act as a catalyst for the development of the local gas market as well as other sectors of the economy.”
The construction and development of this project are generating economic activity where the gas fields and pipeline route are located. The project employs local companies and people, with roughly 15 percent of the upstream costs set to go to Mozambican firms.
A $5 million social fund has been established for a variety of community-based initiatives, including water boreholes, clinics, schools, and agricultural activities. In addition, about $3 million will be made available to support capacity building, training, and institutional development activities for ENH and the Mozambican government over the next 15 years.
The gas transportation infrastructure built around the project is likely to attract additional investments in gas exploration, industrial and commercial gas applications, and small scale gas-to-electricity schemes. The project will also eventually support the substitution of natural gas - a cleaner form of energy - for imported petroleum products and coal. IFC is also looking at using carbon credits to help develop the local gas market in the south of the country.
Haydee Celaya, IFC’s regional director for Africa, noted that “the project will help improve the investment environment in the gas sector, provide a better framework to develop future infrastructure projects, and give Mozambique a clean and efficient source of energy.”
The mission of IFC (www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.7 billion for its own account and $6.6 billion held for participants in loan syndications.
