MIGA issued to Standard Bank of South Africa Limited guarantees of $87.8 million and $25.7 million for its respective loans of $92.4 million to the Republic of Mozambique Pipeline Investment Company (Pty.) Ltd. (ROMPCO) of South Africa and $27 million to Sasol Petroleum Temane Limitada (SPT) of Mozambique. Both SPT and ROMPCO are wholly-owned subsidiaries of the Sasol Limited Group. The guarantees are for a period of up to 13 years against the risks of transfer restriction, expropriation, war and civil dis-turbance, and breach of contract.
MIGA’s coverage of the loans replaces two equity guarantees issued in fiscal 2003 to the Sasol Limited Group in support of its initial investments in ROMPCO and SPT. A portion of the guarantees issued by MIGA has been reinsured under the Agency’s facultative rein-surance program.
MIGA’s guarantees support the development of Mozambique’s Temane and Pande gas fields and the construction of a 865 km cross-border gas pipeline in Mozambique and South Africa. The project represents the first cross border initiative in sub-Saharan Africa in developing regional natural gas markets and will generate many benefits for the local economy, including government revenues estimated to be in excess of $2 billion over the project’s 25-year lifetime. Contracts for local purchases of goods and services on an ongoing basis are estimated to be more than $1 million per year.
The project will substantially add to Mozambique’s infrastructure through the development of roads, water supplies and the removal of land mines. Environmentally, the project will contribute to the reduction of harmful emissions by replacing heavy oils and sulphur-rich coal with clean burning natural gas. (For more on this project, see 2004 Annual Report).
