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Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Gabon Fertilizer Company SA
Project ID
9763
Fiscal year
2013
Status
Proposed
Guarantee holder
OLAM International Ltd.
Standard Chartered Bank
Investor country
Singapore
United Kingdom
Host country
Gabon
Environmental category
A
Sector
Manufacturing
Date SPG disclosed
December 05, 2012
Projected Board date
March 28, 2013
Gross exposure
 $800.0 million
Project type
Non-SIP
Strategic priority area
South-South

Project Description

This summary covers an equity investment by OLAM International Ltd. (Olam) of Singapore and a non-shareholder loan from Standard Chartered Bank of the United Kingdom, and other lenders to be determined, in Gabon Fertilizer Company SA (GFC) in Gabon. Olam and Standard Chartered Bank have applied for MIGA guarantees of up to $800 million for a period of up to 14 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The project will convert underutilized, domestic natural gas reserves to ammonia and, in turn, to granulated urea for sale to global traders of the fertilizer. The project enterprise will include captive power, steam, and water supply facilities, as well as storage facilities. It will also include a jetty for loading ships that will facilitate delivery of urea to various global markets including in Africa. The government of Gabon has already contracted to supply gas to GFC for an initial period of 25 years, which it will procure from private oil and gas operators already operating in Gabon.

Environmental Categorization

The project is a category A under MIGA’s Policy on Social and Environmental Sustainability. Click here to view the Environmental and Social Review Summary prepared by the International Finance Corporation for their investment in the project.

Development Impact

The key expected development benefits include government revenues for the gas used by the project and through dividend distributions, support to the government’s gas anti-flaring policy by creating a market for natural gas, increased availability of a vital input to improve yields for local farmers, employment generation, and knowledge transfer. Broader benefits will accrue from helping the country diversify its economy, which is heavily dependent on oil production.

The proposed project is aligned with the World Bank Group’s Country Assistance Strategy for Gabon, which underlines the need to foster private sector-led investment in non-oil sectors of the economy. It is also in line with MIGA’s strategic priority of supporting South-South investments.
 

 
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