The 500 million U.S. dollars will be available in case Ghana defaults in paying for gas consumption from the field which is expected to produce 180 million standard cubic feet (180 mscf) of gas per day.
ENI owns 44.4 percent of the 7.0 billion dollars Sankofa field while upstream trader Vitol holds 35.6 percent, with the state-owned Ghana National Petroleum Corporation (GNPC) holding a combined and participating interest of 20 percent.
Under the agreement, GNPC undertakes to raise the Letters of Credit (LC) which would then be supported by the World Bank Product Guarantee (PRG) to cover payment obligations under the GSA with the backing of the World Bank.
The LC will be issued by HSBC Bank and Standard Chartered Bank at the instance of GNPC.
“The agreement we are signing today includes the indemnity agreements between the International Development Association (IDA)/ International Bank for Reconstruction and Development (IBRD) and Government of Ghana whereby Government of Ghana will indemnify or reimburse the World Bank for any payments they may make to the LC banks on GNPC’s behalf,” Finance Minister Seth Terkper explained.
“The Sankofa gas is well aligned with our strategy and today reaches an important milestone under its implementation,” Henry Kelary, World Bank Country Director for Ghana, noted.
The World Bank official: “It is a well structured energy investment that has the potential of transforming Ghana’s energy economy.”
Alex Kofi Mould, Chief Executive Officer (CEO) of GNPC, explained that the guarantee was for the Gas Sales Agreement (GSA) and its supporting contractual agreements signed between GNPC (and the State) on one hand, and the Private Gas Suppliers (i.e. ENI and Vitol) on the other.
“Under these agreements, the gas suppliers have undertaken to develop, produce and sell gas to GNPC, and we have undertaken to pay for the gas supplied, and the gas project is expected to generate about 1,000 megawatts of power to Ghana,” he added. Enditem
Source: Xinhua/News Ghana