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Understanding the different Bank Group Guarantee Instruments

Understanding the different Bank Group Guarantee Instruments. Bank Group Guarantees Framework. IFC Partial Credit Guarantees Hedges for clients (interest rate, currency and commodity swaps). Commercial Risk. Investors/ financial institutions. All Risks. Non- Commercial Risk. IBRD

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Understanding the different Bank Group Guarantee Instruments

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  1. Understanding the different Bank Group Guarantee Instruments

  2. Bank Group Guarantees Framework • IFC • Partial Credit Guarantees • Hedges for clients (interest rate, currency and commodity swaps) CommercialRisk Investors/ financialinstitutions All Risks Non- Commercial Risk • IBRD • Partial Risk Guarantees • Partial Credit Guarantees • Policy Based Guarantees • IDA • Partial Risk Guarantees • MIGA • Transfer restriction and currency inconvertibility • Expropriation • War and civil disturbance • Breach of contract

  3. Comparison of World Bank Group Risk Mitigation Instruments

  4. Guiding principles on deployment of instruments • PRGs can be considered in the following situations: • Sectors in early stages of reform • Larger size/riskier operations • Operations highly dependent on support/undertakings of governments • Clout of the Bank needed • Joint transactions • Coordination

  5. World Bank Group Collaboration on Recent Large Infrastructure Transactions

  6. Case Study: The West Africa Gas Pipeline Project (WAGP)Key Features • Pipeline system (678km) that will transport natural gas from Nigeria to Ghana, Togo and Benin • Total project cost $590m: • Guarantees • IDA guarantee for Republic of Ghana $50m • MIGA guarantee for WAPco $75m • Zurich guarantee for WAPco $125m (reinsured by OPIC) • IDA Guarantee terms: • Amount: US$ 50 million • Term: 22 years • Coverage: Government of Ghana’s default for offtake arrangements

  7. Case Study: The West Africa Gas Pipeline Project (WAGP)Project Structure NNPC: Nigerian National Petroleum CorporationCNL: Chevron Nigeria LtdSPDC: Shell Nigeria NCG: wholly owned sub of NNPCWAPCo: newly formed entity owned by: ChevronTexaco WAGP (38.2%), NNPC (26%), Shell (18.8%), Gov’t of Ghana (17%) NNPC/CNL Joint Venture NNPC/SPDC/Agip/Elf Joint Venture NIGERIAN GAS COMPANY (NGC) WEST AFRICAN PIPELINECOMPANY (WAPco) Natural Gas Flow Transporters Communauté Electrique du Benin Volta River Authority Offtakers

  8. Thank you

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