Petroleum Africa
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Friday, July 31, 2015
The board of directors at the World Bank have approved the investment of $700 million in guarantees for Ghana’s Sankofa Gas Project, being developed by ENI and Vitol in the West African country. The gas project is seen as a transformational project that will help address Ghana’s energy shortages by developing new sources of clean and affordable natural gas for domestic power generation.
The board approved a unique combination of two guarantees for the Project – an IDA Payment guarantee of $500 million that supports timely payments for gas purchases by Ghana National Petroleum Corporation and an IBRD Enclave Loan guarantee of $200 million that enables the project to secure financing from its private sponsors. Together, the guarantees are expected to mobilize $7.9 billion in new private investment for offshore natural gas, representing the biggest foreign direct investment in Ghana’s history.
Developing the Sankofa Gas Project is expected to bring significant benefits for Ghana by fueling up to 1,000 MW of clean power generation, replacing polluting and expensive oil-burning electricity. Once the Sankofa field starts to produce gas in early 2018, Ghana will be able to reduce its oil imports by up to 12 million barrels a year and cut carbon emissions by 1.6 million metric tons of CO2 annually.
“The Sankofa Gas Project is a good example of how Africa can address its infrastructure challenges and lay the foundation for sustained economic growth by providing affordable and reliable power to its population,” said Makhtar Diop, Vice President for the World Bank’s Africa Region. “Innovative use of the Bank’s Guarantee Program that helps mitigate the perception of risk and mobilizes private investment can help unlock billions of much-needed financing for large-scale infrastructure projects on the continent.”
Ghana’s Finance Minister, Hon Seth Terkper, said the project is a game changer for Ghana and other middle income Sub-Saharan African countries, as it would help shape the country’s energy sector for the next 20 years. “This project is an essential element of the drive towards consolidating our middle income status, and will help secure our natural gas resources for a more affordable and reliable power supply. This will help boost economic activity and generate more jobs for Ghanaians. It is part of the smart financing we have been talking about, and we are very grateful to the World Bank Group for this major achievement.”
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