The World Bank Group Instruments

The World Bank World Bank Group financing and risk mitigation instruments IBRD/IDA MIGAIFC IBRD Loan for middle income countries IDA concessional Credits and Grants for poorer countries Guarantees partial risk partial credit Tech. Assistance Political Risk Insurance expropriation transfer restriction breach of contract war & civil disturbances IFC A-Loan IFC B-Loan IFC C-Loan IFC Guarantees (partial credit structures – offshore & local financing) Interest Rate and Currency swaps

The World Bank Equity Sponsors IBRD Enclave Loan for IDA-Only Country Offshore Escrow Account Project Revenues Loan Repayment Throughput Purchaser Loan Guarantee IDA-Only COUNTRY IDA-Only COUNTRY Guarantee IBRD Power Company

The World Bank World Bank Guarantees: key features Catalyzes private financing for key sectors such as infrastructure Covers private debt against a government’s (or government entity’s) failure to meet specific obligations to a private or public project Mobilizes private sector participation; helps extend maturities and lower financing costs Flexibility – structured to meet borrower and project requirements Counter guarantee from Member Country

The World Bank World Bank Partial Risk Guarantees Cover these risks tariff regulatory risk collection risk arbitration change in law convertibility transferability subsidy payments (e.g. Output-Based Aid)

The World Bank Partial Risk Guarantees help access finance at sustainable terms Debt MaturityInterest Spread 1 Vietnam (P. Risk) 5% 2% 5 16 Cote d’Ivoire (P. Risk) % 2.75% 1 Bangladesh (P. Risk) 3% 2% 14 with Guaranteewithout Guarantee 1 Spreads at the time of the guarantee issuance Lao PDR (P. Risk) % N/A

The World Bank 4 Basic Covered Risks: - Expropriation - War and Civil Disturbance - Currency Transfer (Inconvertibility) - Breach of Contract (+ Denial of Justice) Principal Covered Investments: –Equity –“Associated” (loosely) Debt Shareholder Loans Debt in project with Insured Equity Investment MIGA: Risks and Investments

The World Bank MIGA Equity Insurance Banks Loans Sponsors COUNTRY Support Power Company Agreement MIGA: Finance Structure

The World Bank IFC: 4 Basic Products Equity and Quasi Equity (Participating loans; Convertible debentures; Preferred stock) Loans from IFC resources (A-loans) Syndicated Loans (B-loans) –Lender of record umbrella –Not a “guarantee” –Degree of currency transfer protection –Other Political Risk Mitigation Guarantees

The World Bank IDA also provides special support for regional integration projects Regional Integration Projects receive 2/3 IDA funding from a special allocation, and the country only contributes 1/3 funding from its IDA allocation Projects must cover at least 3 countries, and demonstrate benefits to more than one country IDA15: US$2.1 billion allocated to Africa Regional Integration

The World Bank A Central Processing Facility (CPF) to process/clean the gas before transport A 865km 26-inch diameter Pipeline between the Gas Fields and Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use Southern Africa Regional Gas Project Development of Gas Fields in Mozambique Inhambane Region (Pande and Temane)

The World Bank Combined Support of IFC, MIGA, IBRD IFC IFC Investment and Advisory Role: Equity investment in Upstream Advisory assistance to CMH in mobilizing financing for the Upstream Facilitating local participation MIGA Political Risk Cover for equity and debt to SPT & Rompco including: Breach of contract Currency transferability Expropriation War & Civil Disturbance IBRD Enclave PRG Political Risk Cover for debt to SPT & Rompco including: Sovereign obligations including changes in laws Currency transferability Expropriation

The World Bank Eastern and Southern Africa Technical Advisory Services Project Aims to help Governments assess and respond to major investment proposals Will provide just-in-time technical advisory support for infrastructure and natural resource projects (e.g. on legal, financial, social and environmental issues) Will help develop the policy and legal frameworks for regional infrastructure projects

The World Bank For further information Please contact: Peter Nicholas, World Bank Diep Nguyen-van Houtte, World Bank