Mozambique - South Africa Gas Pipeline

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The 865 km pipeline was established to transport natural gas from Pande and Temane gas fields in Mozambique to Mpumalanga, South Africa. Sasol Limited, a petrochemicals company and the project’s main sponsor, planned to initially supply the gas to 500 industrial customers. The pipeline was part of ‘Mozambique - South Africa Gas Pipeline Project’ (Mosagas) that included the development of Pande and Tamane gas fields in Mozambique, the construction of a central processing facility in Mozambique and the conversion of the sponsor’s Sasolburg operations to natural gas. The project's sponsors expected a life span of at least 25 years. The pipeline was owned and executed by Republic of Mozambique Pipeline Investment Company (Pty) Ltd. (ROMPCO) of South Africa, a joint venture formed between Sasol and the governments of South Africa and Mozambique. The parties had made provision for the future inclusion of black economic empowerment (BEE) shareholders as well as privatization initiatives. Sasol established a wholly owned subsidiary in Mozambique, Sasol Petroleum Temane Limitada (SPT), to develop the upstream gasfields and the central processing field. The entire project was estimated to cost around US$ 1.2 billion. The pipeline was estimated to cost US$ 410 million. In January 2003, Sasol obtained a 12 month R 550 million (US$ 72.75 million) bridge facility from Development Bank of Southern Africa (DBSA) to finance the construction of the pipeline. For the bridge loan, MIGA provided equity cover amounting to US$27 million for Sasol Petroleum investment in SPT and US$ 45 million for Sasol Gas holding in ROMPCO. In March 2004, Sasol completed a 12 year US$ 1.2 billion project financing. ROMPCO borrowed R1.6 billion (US$ 278.4 million) and Eu100 million (US$ 134 million), while SPT borrowed R1.060 billion (US$ (US$ 184.4 million) and Eu30 million (US$ 40.2 million). The ROMPCO debt was broken down into an EIB tranche of Eu100 million (US$ 134 million), R 200 million (US$ 34.8) from the African Development Bank, and R350 million (US$ 60.9 million) from Development Bank of South Africa. Of ROMPCO’s commercial debt package, R350 million (US$ 60.9 million) had Export Credit Insurance Corporation of South Africa (ECIC) coverage, R70 million (US$ 12.18 million) had coverage from the International Bank for Reconstruction and Development and R320 million coverage from MIGA. The SPT financing included -- R300 million (US$ 52.2 million) from DBSA, AFDB provided R350 million (US$ 60.9 million), and DEG, FMO and Proparco provided Eu30 million (US$ 40.2 million) between them. The pipeline began commercial operations in February 2004.