Submitted by: Sasol Ltd.
Posted: Aug 29, 2002 – 12:00 AM EST
Aug. 29 /CSRwire/ - JOHANNESBURG, South Africa - Petrochemicals giant, Sasol, today announced the appointment of the Development Bank of Southern Africa (DBSA) and the Standard Bank Group as Joint Lead Arrangers for the debt financing of the Mozambique natural gas project.
The project, a venture between Sasol and the governments of the Republic of Mozambique and the Republic of South Africa, will bring natural gas to South Africa during the first half of 2004 and is expected to unlock significant socio-economic and environmental benefits for both countries.
The $1.2 billion dollar investment consists of the Pande and Temane gas field development in Mozambique, a pipeline of some 865 kilometers to Secunda in Mpumalanga, the conversion of Sasol's current gas pipeline network, the supply of natural gas to industries and the conversion of Sasol Chemical Industries in Sasolburg to natural gas as feedstock, in place of coal. Natural gas will also be used as a supplementary feedstock for the Sasol Synfuels plant in Secunda.
Pieter Cox, chief executive of Sasol said: "Sasol is proud to play a leading role in this pioneering project which will provide strong economic impetus for both South Africa and Mozambique. The project has received overwhelming support from multilateral and commercial funding institutions alike and will stimulate industrial growth for both regions. The use of natural gas brings Mozambique and South Africa in line with international energy trends and will yield environmental benefits because natural gas is a clean-burning, cost effective fuel."
The overall debt financing for the project will be in excess of R 4 billion (US $400 million) which is to be provided by commercial banks and multilateral agencies (Standard Bank has underwritten R2.5 billion and DBSA has underwritten R1.5 billion). It is expected that the World Bank Group and export credit agencies will offer credit enhancement to the project through political risk insurance.
Trevor Munday, executive director and chief financial officer of Sasol Ltd said: "A rigorous evaluation and clarification process preceded Sasol's appointment of the DBSA and Standard Bank. Sasol received offers of finance in excess of four times the financing requirement, following the release of a Preliminary Information Memorandum in March 2002. Sasol's choice of DBSA and Standard Bank as lead arrangers was strongly influenced by the quality and competitiveness of their proposals and the substantial experience they both have in the Southern African region. These appointments also reflect Sasol's commitment to enhance growth and local content in terms of financing."
The DBSA will act as lead arranger of the multilateral agency tranche of the debt financing and Standard Bank will act as the lead arranger of commercial bank facilities. Sasol is also investigating debt financing from the European Investment Bank.
Mandla Gantsho, chief executive of DBSA said, "We are delighted to have been selected by Sasol as a lead arranger in this significant project. This project speaks to sustainable development and is a resounding commitment by Sasol and its partners to social, environmental and economic progress in Southern Africa."
Jacko Maree, Standard Bank Group chief executive says, "We are delighted to be partnering Sasol and the DBSA in what is probably one of the most important projects ever undertaken in the sub-Saharan region. This demonstrates Standard Bank's commitment to further develop the African continent for the benefit of all of its people."
Dresdner Kleinwort Wasserstein is acting as financial adviser and Allen and Overy as legal adviser in respect of the financing of this landmark project.
Construction has commenced with site preparation for the pipeline construction having been cleared.
- 660 kilometers of pipe will be imported from Japan and Europe, in nine shipments
- 205 kilometers of pipe is manufactured in South Africa by Hall Longmore
- The pipeline will supply energy equivalent to 6,5 million tons of coal per year