The Sankofa Gas Project in Ghana, approved in 2015, aims to increase the availability of natural gas for clean power generation by leveraging private capital investment. World Bank support to the project underpins $8 billion of foreign private investment in the economy, and overall, represents the largest foreign direct investment opportunity in Sub-Saharan Africa in recent times.
Why is the World Bank supporting the Sankofa Gas Project?
Sankofa has been key to providing energy to Ghana since 2019, with the capacity to produce 1,000 megawatts through power plants that provide electricity for around 1.6 million households and many businesses which need reliable source of power.
Since Sankofa came online, Ghana’s annual oil imports have dropped by 12 million barrels and carbon emissions fell by 1.6 million metric tons of CO2.
The gas price formula protects Ghana from future increases in oil prices.
From the 171 million standard cubic feet per day expected to be produced by the Sankofa Gas Project, 5% will be paid in kind to the Government of Ghana in the form of royalties. The Ghana National Petroleum Corporation (GNPC) will get 20% of the rest as per its stake in the project.
Taking into account the net revenues generated by the project for both the Government of Ghana and GNPC, the cost of gas to Ghana is expected to be $6.6/mmBtu, equivalent to an oil price of $38 per barrel, significantly below cost of imported liquid fuels.
The Government of Ghana and GNPC will have the ability to combine the gas prices from the Sankofa, Jubilee and Tweneboa, Enyenra, Ntomme (TEN) fields into one blended, affordable price charged to the power sector.
What is the nature of the World Bank support to the project?
The World Bank is supporting the Sankofa Gas Project with a $500 million payment guarantee for the payment obligation undertaken by GNPC under the Gas Sales Agreement.
The International Finance Corporation, the World Bank Group’s private sector investment arm, is one of the Mandated Lead Arrangers in a bank consortium that mobilized more than $1 billion, including $300 million from IFC, while the Multilateral Investment Guarantee Agency provided a $217 million Political Risk Insurance to one of the sponsors.
How will the revenues from this project be transparently managed for Ghana’s benefit?
Ghana has a solid regulatory and legal framework which regulates the use of petroleum revenues - the Petroleum Revenue Management Act (PRMA). This framework ensures that petroleum revenues are allocated and used in a responsible manner.
In 2020, the project is enabling natural gas usage to its full capacity of 171 million standard cubic feet per day, and contributes to Ghana’s energy security, reduction of pollution by limiting Heavy Fuel Oil consumption and saving more $100 million of the budgetary spending every year due to the substitution of more expensive fuels with natural gas.
How will the project ensure the highest environmental and social standards?
The project has been designed in accordance with best international practice and World Bank Group Environmental, Health and Safety Guidelines.
The Environmental, Social, and Health Impact Assessment has been prepared for the project in accordance with the World Bank Performance Standards. The preparation included extensive consultation with national, regional, and local stakeholders.
What is the current status of the World Bank project?
The World Bank Sankofa Gas Project was completed in December 2018. More information can be found in its Implementation Completion Report finalized in June 2020.
The Guarantee associated with the project continues to be operational for its contractual duration.