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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
Gigawatt Mozambique SA
Project ID
12300
Fiscal year
2015
Status
Proposed
Guarantee holder
Standard Bank of South Africa Ltd.
Gigajoule Power (Proprietary) LTD
Investor country
South Africa
Host country
Mozambique
Environmental category
B
Sector
Power
Date SPG disclosed
August 05, 2014
Projected Board date
September 11, 2014
Gross exposure
 $214.0 million
Project type
Non-SIP
Strategic priority area
IDA
Complex Project
ESRS
Original version, disclosed on August 5, 2014

Project description

This summary covers an equity investment by Gigajoule Power (Proprietary) LTD of South Africa and a non-shareholder loan from Standard Bank of South Africa for Gigawatt Mozambique SA in Mozambique. The investor and lender have applied for MIGA guarantees of $214 million for a period of up to 15 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The project involves the construction and operation of a 118 megawatt natural gas-fired power plant near the town of Ressano Garcia in southern Mozambique. The new plant will supply baseload energy capacity to the country.

Environmental Categorization

The project is a category B under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary.

Development Impact

Mozambique’s electrification rate of 34 percent is one of the lowest in the world. Demand for electricity is concentrated in the southern part of the country, while most of the installed generation capacity is located in the north and predominately serves the export market to South Africa and Zimbabwe. With the price of electricity in the southern African regional market forecasted to grow rapidly in the next five years due to a surge in power demand, supply constraints are hampering regional economic growth. The project in southern Mozambique will provide a key benefit to the local, highly underserved market through the additional generation of 118 megawatts of energy, at reasonable prices, using gas resources.

This project is aligned with the World Bank Group’s Country Partnership Strategy for Mozambique, which calls for improved energy access under the pillar of competitiveness and employment. It is also aligned with MIGA’s strategic priorities of supporting investments into countries eligible for concessional financing from the International Development Association and investments into complex deals in infrastructure.

 
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