Standard Bank, the Development Bank of Southern Africa (DBSA) and several international partners have successfully closed one of the biggest infrastructure deals in Africa, which will see them providing nearly R3,83-billion in debt finance for Sasol’s multi-billion rand natural gas project.
Standard Bank and the DBSA are joint lead arrangers of the $1,2-billion project (about R7,5-billion) — a venture between Sasol and the South African and Mozambican governments. The European Investment Bank will also be providing R900-million of the loan funding to the project both in South Africa, where it has lent over € 1-billion (R8-billion) since commencing operations in the country in 1995, and in Mozambique, with part of the finance coming from its recently established € 2,2-billion Cotonou Investment Facility.
Funding was required for the development of the Pande and Temane gas fields in Mozambique, the construction of a central processing facility in Mozambique and the building of an 865km pipeline to transport the gas to Sasol’s Secunda plant in Mpumalanga, South Africa.
Says Jacko Maree, Standard Bank chief executive: “We are delighted to be partnering Sasol and the DBSA in one of the most important projects ever undertaken in the sub-Saharan region. It affirms our commitment to our key corporate clients, to our burgeoning oil and gas business and to infrastructural development in the region.”
Sasol chief executive, Pieter Cox, says: “The project is ample testimony of Sasol’s ability to participate confidently in the international oil and gas exploration and production fields. It is the catalyst for our group’s longer-term growth in southern Africa and will provide significant opportunities for the development of a natural gas industry in the region.”
Standard Bank acted as the lead arranger of the commercial bank facilities. The financing teams of Standard Bank and Sasol managed to secure high calibre political risk cover for the financing transaction from a host of export credit agencies, including the South African (ECICSA), Italian (SACE) and Australian (EFIC) agencies; MIGA (Multilateral Investment Guarantee Agency); and the World Bank (International Bank for Reconstruction and Development).
Joyce Matlala, DBSA Executive Manager says: “This project is a watershed investment for the DBSA as it clearly demonstrates our ability as a major regional development finance institution capable of delivering on its mandate not only in providing cross border finance with the private sector, but also in taking the lead in arranging our international Development Financial Institutions (DFI) and Multilateral Agencies (MLA) partners in securing finance for this project.”
The DBSA acted as lead arranger and underwriter of the DFI/MLA tranche of the debt financing (R1,5-billion). The African Development Bank as well as three European Development Finance Institutions, namely Societe de Promotion et de Participation Pour la Cooperation Economique (Proparco), Deutsche Investitions-Und Entwicklungsgesellschaft MHH (DEG) and Nederlandse Financierings-Maatschappij voor Ontwikkeligslanden NV (FMO), participated in this tranche of the debt.
The project is expected to bring significant socio-economic and environmental benefits to both South Africa and Mozambique, including:
helping to develop regional natural gas markets and enhancing regional trade ;
contributing to Mozambique’s economy by providing significant revenues over the project’s expected 25-year life;
providing contracting opportunities for Mozambican and South African companies;
creating hundreds of jobs for local residents during project construction;
contributing to infrastructural development through the building of roads and the removal of landmines in the project area.
Sasol is contributing $5-million for the social upliftment of communities living along the pipeline in Mozambique, while $1-million will be provided for projects benefiting communities living along the pipeline in South Africa.
When the pipeline reaches full capacity, it will boost the proportion of natural gas as South Africa’s primary energy supply from the current 1,5% to about 4,3%. This is in line with the South African government’s policy of diversifying energy supply. The project is expected to deliver 120-million gigajoules of natural gas a year by 2008. – I-Net Bridge