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MOS - Guarantee Operations

World Bank Monthly Operational Summary
Guarantee Operations
April 2012
data as of March 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.

 


Kenya

Energy and Mining

Kenya Private Sector Power Generation Support Project (Private Sector): A series of IDA PRGs in an amount of US$ 166 million are supporting 4 IPPs. These IPPs include three thermal and one geothermal. MIGA and IFC are also providing support for the operation. Board Approval was completed on February 28, 2012. 

 

Lake Turkana Wind Project IPP (Private Sector): IDA PRG of EUR 54 million, to be reduced to EUR30 million is being considered in support of the development of a 300MW wind farm, which will be located near Loyangalani in Marsabit County, approximately 12 km east of Lake Turkana in north-eastern Kenya. The objective is to increase the capacity of clean electricity generation in Kenya. The Concept Note Review completed on November 2011. Board Approval tentatively scheduled for late-FY12. 

 

Tanzania

Energy and Mining

Singida Wind power: An IDA PRG of $100m is being prepared to support the 100 MW Singida wind farm, which will be located at Singida in Tanzania. The Concept Note Review was completed on 9 June 2011. A full preparation mission was fielded during 7-18 November 2011. Board Approval scheduled for FY13.

 

Ruhudji Hydropower Project: An IDA PRG of $200m is being prepared in support of the 358 MW Ruhudji hydropower plant. The Concept Note Review Meeting was completed on 9 June 2011. A full preparation mission was fielded during 7-18 November 2011. Board Approval scheduled for FY15. 

 

Nigeria

Energy and Mining

Energy and Gas Improvement (Private Sector): (formerly Energy and Gas Infrastructure) The objective is to strengthen the value chain for power generation by ending the bottlenecks in the supply chain for power generation—previously a fundamental constraint to economic growth in the country. The guarantees will support the Power Holding Company of Nigeria's gas supply payment obligations to international and domestic oil companies which will help mobilize gas supplies for power generation. The PRGs would help to assist the Government in putting in place an appropriate framework for IPPs as well as the extent of Government support to be provided through the PRGs. IDA PRGs of US$ 400.00 million were approved for the first phase of the project. Executive Directors Approval completed on 16 June 2009.

 

Serbia

Fiscal Support

Private and Financial Sector Policy Based Guarantee (Sovereign Borrowing): The objective is to support reforms in three policy areas: (a) enhancing business environment to encourage private sector investment; (b) strengthening financial discipline with continued reform of the non private enterprise sector; and (c) building a stable and more efficient financial sector. The IBRD PBG in Euro in the amount equivalent of US$400 million (up to EU€ 300 million) will support the borrowing of the Republic of Serbia from a commercial bank. Executive Directors completed on 10 February 2011.




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