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
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.