The Mozambique Liquefied Natural Gas (LNG) Area 1 Project and financial organisation the African Development Bank (AfDB) have jointly received the Global Multilateral Deal of the Year 2020 award, from 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 target Mozambique’s offshore natural gas reserves.
The AfDB in July 2020 signed an agreement for a $400-million senior loan to finance the project.
In signing the loan agreement, the AfDB joined a global syndication of commercial banks and export credit agencies that are providing financing, which includes direct loans and 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. The consortium is providing the balance of financing through equity.
Financial close on the project is expected this year.
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 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 fertiliser and electricity producers.
PFI, in its award announcement, noted that the project had faced many challenges in securing financing, including the Covid-19 pandemic.
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-sized enterprises to enter the project’s supply chains and promote good standards of governance and transparency in Mozambique.