The Government of Ghana has signed an agreement of 500 million dollars with the World Bank to provide financial guarantee for the Sankofa Gye Nyame Oil and Gas Project located in Takoradi in the Western region.
The World Bank has already negotiated the legal documentation with the project sponsors, ENI, Vitol, GNPC, and the government of Ghana.
Two international banks, HSBC and Standard Chartered Bank are expected to jointly provide the fund as the World Bank guarantee.
Speaking at the signing ceremony in Accra, the Finance Minister, Seth Terkper explained that the project which will add about 180 million standard cubic feet of gas to national grid, required a guarantee to pay off if power companies failed to settle their debts on time.
“A reserved escrow funded by the GNPC currently estimated at approximately 140 million dollars being equivalent to 4.5 months of gas sales which will be accessible only if the proceeds from the above payment mechanisms are insufficient,” Mr. Terkper remarked.
He added, “We are seeing a hierarchy of guarantees which will be called upon only when as Ghanaians we fail to pay for the power that we produce.”
Meanwhile, the World Bank Country Director, Henry Kerali described the project as being in line with the bank’s plan of providing clean energy.
“This gas supply will be stable, secure and a local source that will also provide employment and a cleaner source of power. The project will therefore contribute to reducing greenhouse gas emissions resulting from a shift in power generation from oil to gas,” he asserted.
Gas production on the Sankofa, Gye Nyame Oil and Gas Project is expected to commence in early 2018.
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