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MOS - Guarantee Operations

World Bank Monthly Operational Summary
Guarantee Operations
August 2013
data as of July 15, 2012

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Terms and Conditions

 


 

In September 1994, the Bank’s Executive Directors approved a proposal to make guarantees a mainstream instrument of Bank operations. These guarantees are most likely to be used for infrastructure financing, where the demands for funding are large, political and sovereign risks are significant, and the need for long-maturity financing is often critical to a project’s viability.

 

By covering some of the risks that the market is not able to bear or adequately evaluate, the Bank’s guarantee can attract new sources of finance, reduce financing costs, and extend maturities. The guarantee can be especially valuable where activities traditionally undertaken and financed by the government are being shifted to the private sector but where the government remains as a regulator or provider of inputs and a buyer of outputs. The Bank’s participation as guarantor can also facilitate the transparency of these transactions.

 

Since the guarantee is intended to be a catalytic instrument, the Bank offers only partial guarantees, and risks are clearly shared between the Bank and private lenders. The Bank’s objective is to cover risks that it is well-positioned to bear given its credit, its experience with developing countries, and its special relationships with governments. The risk-sharing may be for specific risks (the partial risk guarantee) or for part of the financing (the partial credit guarantee).

 

A partial risk guarantee covers risks arising from nonperformance of sovereign contractual obligations or from force majeure aspects in a project. A partial credit guarantee typically extends maturities beyond what private creditors could otherwise provide, for example, by guaranteeing late-dated repayments or by providing incentives for lenders to roll over medium-term loans.

For more information on the Bank’s guarantee program and to obtain a copy of the pamphlet “The World Bank Guarantees: Leveraging Private Finance for Emerging Markets” (available in English, French, Portuguese and Spanish), please contact the Project Finance and Guarantees Group. Tel: (202) 458-8111; Fax: (202) 522-0761, or visit www.worldbank.org/guarantees.

 

 


Africa Region

Cote d’Ivoire

Energy and Mining

Foxtrot Gas Field Expansion: The objective is to improve the availability of natural gas for power generation in an environmentally sound manner. IDA PRG US$ 60 million. Board Approval completed on 18 June 2013.

 

Kenya

Energy and Mining

Kenya Private Sector Power Generation Support Project (Private Sector): The objective is to increase power generation through independent power producers (IPPs). Four IDA PRGs US$ 166 million. MIGA and IFC are also providing support for the operation. Three Guarantees were signed on 28 August 2012, 5 December 2012, and 14 March 2013, respectively.

 

Mauritania

Energy and Mining

 Gas to Power PRG: The objective is to increase the electricity supply through development of gas infrastructure. IDA PRG US$ 80 million. The Board Approval scheduled for FY14.

 

Nigeria

Energy and Mining

Nigeria Power Sector IPP Guarantees Project: The objective is to support power sector development and privatization of distribution and power generation companies. A series of IDA PRGs US$ 1 billion. Board Approval scheduled for FY14.

 

Tanzania

Energy and Mining

Singida Wind power: The objective is to improve the environment for private sector investments in climate-friendly wind generation capacity. IDA PRG of US$ 100 million. Board Approval scheduled for FY14.

 

Ruhudji Hydropower Project: The objective is to improve the environment for private sector investment in power sector, thereby increasing electricity supply. IDA PRG of US$ 200 million. Board Approval scheduled for FY15.

 

East Asia and Pacific Region

Croatia

Financial Sector

Croatia PCG: The objective is to support the Croatian Bank for Reconstruction and Development (HBOR) to improve long-term financing terms. PCG EU€ 200 million. Board Approval completed on 27 June 2013.

 

Kosovo

Energy and Mining

New Kosovo Power Plant (NKPP) IPP: The objective is to support a private sector independent power producer and lignite mine development company. IDA PRG of US$ 54 million. Board Approval scheduled for FY15.

 

 




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