[ 2016-09-25 ]

Sankofa gas project receives US$700m World Bank guarantee

Ghana has received a US$700-million guarantee from
the World Bank for its Offshore Cape Three Points
(OCTP)- Sankofa gas project ahead of anticipated
oil and gas production in 2017 and 2018,
respectively.



The project, which will be the country’s largest
gas producing field, will receive a US$500-million
International Development Association (IDA)
payment guarantee and a US$200-million
International Bank for Reconstruction and
Development (IBRD) enclave guarantee.

An agreement to that effect has subsequently been
signed in Accra, with the World Bank Country
Director, Mr Henry Kerali, signing on behalf of
the bank, while the Finance Minister, Mr Seth
Terkper, signed on behalf of the government of
Ghana.

The IDA payment guarantee covers the risks of
non-payment by the national oil company, the Ghana
National Petroleum Corporation (GNPC), of its
payment obligation under the gas sales agreement
covering the Sankofa field.

The IBRD enclave loan agreement, on the other
hand, will support project financing for the
private sector by covering debt service defaults
as a result of breach of specified contractual
obligations by the GNPC and the government.

At the ceremony, Mr Terkper said “the agreements
we are signing today include the indemnity
agreements between the IDA/IBRD and the
government, whereby the latter will indemnify or
reimburse the World Bank for any payments they may
have to make to the letters of credit (LC) banks
on GNPC’s behalf”.

He said the primary source of payment by the GNPC
under the agreements were proceeds from the sale
of purchased gas, and as support guarantee, the
GNPC’s approved share of petroleum revenue from
the Jubilee, TEN and Sankofa Gye Nyame fields, as
well as the World Bank’s partial risk guarantee
(PRG) and sovereign guarantee.

Driving economic growth

Mr Terkper said the development and production of
the Sankofa Gye Nyame gas field was expected to
yield major economic and social benefits to the
nation, including increased petroleum revenue
through royalties and taxes, as well as creating
jobs and employment opportunities from the
development of the domestic gas market.

“We will also have a competitive gas price which
will enhance national energy security and position
Ghana as a regional hub for energy supply to the
rest of West Africa and also have access to
long-term cheaper and sustainable gas feedstock
which will spur the nation’s industrialisation
drive,” he added.

The acting Chief Executive of the GNPC, Mr Alex
Mould, said the Sankofa project was one of the few
projects around the world that had progressed, in
spite of the challenging oil and gas environment.


He said the GNPC was working with the project
partners, Eni and Vitol, to ensure that first gas
was obtained on the scheduled date — the second
quarter of 2018.

Energy, a priority

Mr Kerali said the World Bank had made energy a
priority under its strategy to achieve its twin
goals of eliminating extreme poverty by 2030 and
boosting shared prosperity in sub-Saharan Africa.

He said the Sankofa gas project was aligned to the
World Bank’s strategy, adding: “It is a
well-structured energy investment that has the
potential of transforming Ghana’s energy
economy.”

He expressed confidence that support by the Bank
would be instrumental in providing affordable,
reliable and sustainable energy services to
Ghanaians.

Source - graphic.com.gh

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