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… initiating development and export of Mozambique’s substantial natural gas resources in an environmentally sustainable manner, thereby contributing towards economic growth and poverty reduction. Southern Africa Regional Gas Project.

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… initiating development and export of Mozambique’s substantial natural gas resources in an environmentally sustainable manner, thereby contributing towards economic growth and poverty reduction.

Southern Africa Regional Gas Project

A 865km 26-inch diameter Pipeline between the Gas Fields and Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

Project Description

Development of Gas Fields in Mozambique Inhambane Region (Pande and Temane)

A Central Processing Facility (CPF) to process/clean the gas before transport

components in mozambique and south africa

Temane/Pande Gas Field Development

Central Processing Facility (CPF)

Pipeline between Temane and Ressano Garcia (at the border)

South Africa

Pipeline between Komatipoort and Secunda

Secunda Synthetic Fuels Plant Expansion

Sasolburg Plant Conversion

Natural Gas Network Conversion

Components in Mozambique and South Africa
institutional implementation arrangements
Institutional & Implementation Arrangements


Upstream Project

Pipeline Project

Point of Sale

Gas Fields



Point of Delivery

Central Processing Facility

Temane Pande





SCI Sasol Synfuels Natref Others

Sasol 100%

SPT 70% CMH 25% IFC 5%

SPT 70% CMH 25% IFC 5%

CPF Price

iGas Option CMH Option


Jointly up to 50%

Sasol Gas

Wellhead Price + CPF Price

Gas Buyer & Shipper

Transmission Tariff




Gas Transportation Agreement

Gas Sales Agreement

Sasol Gas

project benefits
Project Benefits
  • General population
    • Long-term benefits from the provision of major infrastructure
      • Local gas market development through 5 take off points
      • Gas exploration and gas-based industries
    • Fiscal Benefits: About US$ 498 million in royalties and taxes over 25 years
      • Revenues transparently accounted for in the budget
      • Monitoring arrangements for expenditures through MTEF
    • Additional revenues are expected from returns on GoM equity participation
    • Environmental benefits through usage of cleaner fuel
project benefits contd
Project Benefits contd.
  • Local communities
    • About 3000 jobs created during construction, of which 1000 are Mozambican nationals
    • Social Development Fund of US$ 5million established by Sasol for investment in community-based activities
  • Small businesses and local contractors
    • Increased opportunities for local suppliers of goods and services
  • Sector professional and management staff
    • On the job training and transfer of technology and expertise
    • US$ 3 million training budget provided by Sasol
wbg approach to mobilize private financing and mitigate political risks

IFC Investment and Advisory Role:

Equity investment in Upstream

Advisory assistance to CMH in mobilizing financing for the Upstream

Facilitating local participation


Political Risk Cover for equity and debt to SPT & Rompco including:

Breach of contract

Currency transferability


War & Civil Disturbance

WBG approach to mobilize private financing and mitigate political risks…
  • IBRD Enclave PRG

Political Risk Cover for debt to SPT & Rompco including:

    • Sovereign obligations including changes in laws
    • Currency transferability
    • Expropriation

Changane River floodplain, vicinity of pipeline crossing

Stringing of the Pipe along the right-of-way in Mozambique

ifc enabling mozambican participation
IFC:Enabling Mozambican Participation
  • Large project needed Mozambican participation to allay political risk and to give a sense of ownership
  • Mozambique’s dilemma: How to fund its equity without recourse to government money ?
  • IFC advised on strategic options to fund equity with a focus on local participation
  • Invest alongside CMH in the upstream component
ifc equity investment and advisory role
IFC: Equity Investment and Advisory Role
  • 5% equity in the upstream project for a total proposed investment of $18.5 million
  • Mobilize funds for CMH
  • Local Participation
    • Phase 1: Institutional investors
    • Phase 2: companies and individual investors once revenue stream is stable
miga phase i political risk cover for equity






MIGA Phase I: Political Risk Cover for Equity

ROMPCO Equity Guarantee

USD45 m

SPT Equity Guarantee

USD27 m



South Africa


miga phase ii modification of coverage to include debt









MIGA Phase II:Modification of Coverage to Include Debt


USD25 m


USD21.3 m

SPT Loan


USD25.65 m

ROMPCO Loan Guarantee

USD89.05 m (MIGA USD42.75 m, SACE USD25 m, EFIC USD21.3 m)

SPT Equity Guarantee

USD2.7 m

ROMPCO Equity Guarantee

USD4.5 m




South Africa



using ibrd guarantees to support private enclave project in mozambique
Using IBRD guarantees to support Private Enclave Project in Mozambique
  • First IBRD Enclave guarantee:
    • …proposed guarantee for an export-oriented, commercial project generating foreign-exchange outside of Mozambique…
    • …adequate arrangements ensuring that the borrower will be able to meet its obligations to IBRD in respect of IBRD guarantee of the loan.
  • Use of a PRG is critical in achieving financial close:
    • Risk of the transaction
    • Benefits from an explicit counter-guarantee
    • Linkage with Bank’s remedies, Bank’s sector dialogue and conditionality.
guarantee structure
Guarantee Structure


Petroleum Production Agreement

Pipeline Agreement


(Sasol owned, Moz company)


(Sasol owned, RSA company)

Indemnity Agreement

Project Agreement

Project Agreement

Loan Agreement

Loan Agreement

Guarantee Agreement SPT

Guarantee Agreement ROMPCO

SCMB (Lead arranger)

proposed pricing of the guarantee
Proposed Pricing of the Guarantee
  • Guarantee fee 2 % p.a. collected semi annually
    • Bank retains all
  • Standby fee 0.75 % p.a.
    • Bank retains all
  • Front-end fee 1%
  • Initiation fee US$ 100,000
  • Processing fee 0.50 % of principal of guaranteed loan
  • First Loss Project lenders to take first loss in amount equivalent of 5% of principal amount of the guaranteed loan plus six month interest payments for the applicable interest payment period.
environment social safeguards compliance
Environment & Social Safeguards Compliance
  • South African and Mozambican EIAs/EMPs (1999-2003)
  • Bank Group safeguard policies applied to the entire project
  • Bank Group has required the sponsor to carry out:
    • Regional Environment and Social Assessment (RESA) to assess the broader environmental context and manage the induced impacts
    • Resettlement Planning and Implementation Program (RPIP)
    • Social development Action Plan
    • A consolidated Summary and an Update to facilitate communication and disclosure

Pipeline re-routed to minimize impacts. 13 Baobabs that could not be avoided were transplanted.

project agreements1
Project Agreements
  • Petroleum Production Agreement (PPA): The GoM grants SPT and CMH exclusive rights for the development, production & disposition of reserves located in the Pande & Temane Field Reservoirs, “the Petroleum Production Area”.
  • Pipeline Agreement (PA): GoM grants authorization to ROMPCO to construct, own & operate the gas pipeline, related infrastructure & equipement to trasport natural gas, for 30 years.
  • Gas Sales Agreement (GSA): Regulating the commercial relationship between the sellers- SPT, CMH, & IFC, and the buyer, Sasol Gas Limited
  • Gas Transportation Agreement (GTA): Securing a revenue stream for Rompco though an adquate ship or pay obligation of the transporter, for 25 years
  • Joint Operation Agreement: Between SPT and CMH for the development of the Pande & Temane Fields. SPT is designated as the Operator under the Agreement
  • Cross-Border Agreement: Framework agreed by GoM and GoSA to facilitate trade of natural gas between the two countries
  • Regulatory Agreement: Provides for the licensing and sets out the scope of regulatory dispensation granted by the RSA under the Gas Act to Sasol