ABIDJAN,
Ivory Coast, February 11, 2021/ -- The Mozambique Liquefied Natural Gas
(LNG) Area 1 Project and the African Development Bank (www.AfDB.org)
have jointly received the prestigious Global Multilateral Deal of the
Year 2020 award by the print and online publication Project Finance
International (PFI).
The
project, the single largest foreign direct investment in Africa to date
with a value of over $24 billion, will exploit Mozambique’s immense
offshore natural gas reserves, which can potentially transform global
energy markets. The African Development Bank signed an agreement for a
$400 million senior loan to finance the project in July 2020.
In
signing the loan agreement, the African Development Bank joined a
global syndication of commercial banks and export credit agencies that
are providing financing. This financing includes direct loans as well as
export credit agency-covered loans with 16- and 18-year tenors. The
project is implemented by an international consortium of energy
developers and operators led by Total as the operator of the project. It
includes Mitsui, Oil India, Bharat Petroleum, PTTEP, Oil and Natural
Gas Corporation (ONGC) and Mozambique's national oil and gas company,
Empresa Nacional de Hidrocarbonetos (ENH). The consortium is providing
the balance of financing through equity. Financial closing on the
project is expected in 2021.
Mozambique is expected to become one
of the world’s largest LNG exporters. Its gas represents an important
source of LNG supply diversification. The project will boost the
country’s ability to meet energy demand through gas-fired electricity
and will support its ambitious goal to provide universal access to
energy to its citizens by 2030. The project can also potentially feed
downstream industries that use natural gas, such as fertilizer and
electricity producers. It can thus become an engine for agricultural
development and trade across the Southern African Development
Corporation region.
PFI is the leading source of intelligence on
global project finance. In its award announcement, it noted that the
project had faced many challenges in securing financing, including the
COVID-19 pandemic.
“I still find it remarkable how so many
project financings were transacted this year,” including the Mozambique
LNG deal, said PFI’s Editor Rod Morrison.
“The multilaterals
played a key role in getting the project financed,” Morrison said. In
addition to the African Development Bank, PFI cited the participation of
United States Export Import Bank and Japan Bank for International
Cooperation as critical.
In addition to loan financing, the
Bank played a lead role in ensuring the project’s compliance with strict
environmental and social standards. It also invested in strengthening
the capacity of small and medium enterprises to enter the project’s
supply chains and promote good standards of governance and transparency
in Mozambique.
Dr. Akinwumi A. Adesina, President of the African
Development Bank, said: “I am delighted with the award of the Global
Multilateral Deal of the Year 2020 to the African Development Bank and
the Government of Mozambique LNG Area 1 Project, by Project Finance
International. This great recognition reinforces the African Development
Bank’s leadership and role in helping to structure financing and
attract investments to Africa. The $24 billion project, which was
structured at the Bank’s Africa Investment Forum, is Africa’s largest
foreign direct investment. We will work with all partners to ensure that
this project helps to unlock greater economic growth for Mozambique and
benefits millions of people in the country, while building climate
resilience.”
Overall, the project aligns with a number of the
African Development Bank’s strategic goals and its country strategy for
Mozambique and for Southern Africa. These goals include boosting
employment, expanding universal electricity access and leveraging
natural resource development for investment in sustainable
infrastructure.
Fernando Balderrama, Chief Investment Officer
with the Bank, said: “We are excited about the growth and
industrialization opportunities created through this project for the
Mozambican population.” He added: “The African Development Bank will
continue to play a convening role to facilitate and assist with the
suitable implementation of this investment, advocating for international
best practice, small and medium enterprise development and
diversification, women’s empowerment, job creation, and other critically
important considerations.”
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