Imperial Fleet Services Lesotho (Proprietary) Limited

In its first project in Lesotho, MIGA issued guarantees covering $11 million in equity and $12.75 million in a shareholder loan to Imperial Group (Proprietary) Limited of South Africa (IGSA) for its investment in the partial privatization (60 percent) of the government's Plant and Vehicle Pool Service Unit (PVPS). MIGA insurance covers the investment against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

Approximately 1,200 of PVPS's 2,000-vehicle fleet will be privatized under a sale-and-lease-back and maintenance agreement between IGSA and the government. The project enterprise, Imperial Fleet Services Lesotho (Proprietary) Limited (IFL), will be used exclusively by the government for all of its vehicle fleet leasing, maintenance, acquisition, and short-term car rental requirements. IFL will operate out of seven locations across the country.

This privatization, one of the first in the country and with full IBRD support, should significantly reduce costs. It will improve service quality by implementing an extensive training program, both onsite and in South Africa, leading to the enhancement and transfer of skills in information systems, technical capabilities, and financial, administrative, and customer services. IFL is expected to procure $6 million in local goods and services annually and pay approximately $17 million in taxes during the first five years of the project. IGSA considered MIGA's involvement in the project critical; the investor said it would not proceed with the acquisition of the PVPS fleet without MIGA's support.