Lessons Learned in South Africa

Strictly Private and Confidential

Maputo, 31 May & 1 June 2007

Workshop on Large Project Finance

Alastair Campbell

Director – Project Finance

Standard Bank – Corporate & Investment Banking Division

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Table of contents

Page

Table of contents 2

Standard Bank around the globe 4

Projects on which this presentation has been based 6

The Nature of Mozambique’s soon to be developed Large Project Finance 8-9

Recommendations 11-12

Conclusion 13

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Workshop on Large Project Finance – May 31 & June 1

The Standard Bank GroupAn overview of the banks global presence

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The Standard Bank Group

Standard Bank Around the Globe

Corporate and Investment Banking Division of Standard Bank

The Bank

Standard Bank has operations throughout the world, operating in 38

countries outside of South Africa.

Rooted in Africa, with strategic representation in key sub-Saharan markets, Standard Bank is a regional banking force with a global sweep.

• 39,080 employees including Liberty Life, 31,905 in

South Africa

• Represented in 39 countries with an emerging

markets focus

• Over 700 branches in South Africa, 234 in the rest

of Africa

• Over 3,000 ATMs in South Africa, 314 in the rest of

Africa

• ZAR593 billion in assets

• Market capitalization of ZAR113 billion

Interesting Facts

Market capitalisation as at December 2006: R113 billion

Standard

Bank Group

Retail banking

Internationa

l

Stanbic Africa

Liberty

GroupSTANLIB

Banking, investment, insurance and other financial services to individual customers, the agricultural sector and small and medium-sized enterprises throughout South Africa

Investment banking activities and private banking through offices in 21 countries outside Africa

Retail, commercial and investment banking services in 16 countries outside of South Africa

Value-added financial and non-banking services both locally and internationally

Management of institutional and retail funds, investment portfolio’s and financial product development

Corporate and Investment

Banking

Commercial and investment banking services to larger corporates in South Africa, foreign banks and international counterparts.

Property-related finance and advisory services and management of industrial, office, retail, specialised property and wholesale residential development

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Projects on which this presentation has been basedTombstones

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Tombstones of projects on which this presentation has been based

Mozal I

Club participant

and Underwriter of

ECA tranche

Mozal II

Club Participant

and Underwriter of

ECA tranche

Sasol Natural

Gas Project

Lead Arranger

and

Underwriter

Maputo Port

Privatisation

Financial adviser

And arranger to

MPDC

Moatize

Financial adviser to

CVRD on IBFS

And Development Plan

CMG

ZAR 1.08bn

Equity finance

Motraco

Financial adviser to

Motraco

Marromeu

Lead Lender

And

Arranger

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Mozambique's Large Project FinancingsCharacteristics of the soon to be developed mineral and energy projects

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Characteristics of Mozambique’s large Project Financings

Many of Mozambique's large projects form part of Corridor developments Energy projects: Generation linked to Transmission development Mineral projects: Route to port becomes an issues (Moatize, CSL, Riversdale) A coordinated approach is critical Inter-ministerial considerations

Inter modal and nodal considerations

Increases the complexity of the projects International lawyers are necessary Dual currency considerations (Eskom now insisting on paying for power in ZAR) Bankability NMPD and the inter governmental and utility issues

Cross border nature of projects

The remote nature of most of the projects brings its own challenges: Need developers who have significant appetite and balance sheets Mobilisation and demobilisation costs become relevant Lack of supporting infrastructure in the project/concession area

Geographic

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Characteristics of Mozambique’s large Project Financings

Many of the projects are being developed in these sector areas Mineral developments are focussed on the Tete province Supporting infrastructure needs in the area are significant Resettlement and social upliftment in the region is a prerogative

Mineral and energy focus

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Lessons that can be learnt from previous projectsCharacteristics of the soon to be developed mineral and energy projects

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Recommendations

1 The cost benefit of such an approach is tangible Maputo Port took 5 years to close with a few hiccups along

the way

Appoint appropriate advisers Financial Technical Environmental Legal

Recommendation Rationale

2 A bespoke solution is likely to be needed for each projectThe same size does not fit all?

Project Financings are different in each case Transport concession arrangements PPP standard documentation is unlikely to work

3 IAC members must be empowered to make decisions on

behalf of the ministries/entities to which they report Creation of IAC is a good thing Creation of a co-ordinating body that

oversees the development from the governments perspective

4 If a developer knows the government is committed to a

timetable then it will be more likely to come to MozambiqueTimetable Create an investor friendly

environment

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Recommendations….(continued)

5 Doing business in Africa is not the same as for example

Europe or the US A lot of patience is required

Strong Individuals? Sometimes big egos get in the way

of good projects

Recommendation Rationale

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Thank You

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Relevant contact persons at Standard Bank

Alastair CampbellDirector – Investment BankingEnergy Sector focusProject Finance

Contact: +27 11 636 6416Email: [email protected]

Greg AnserminoDirector – Investment BankingMineral sector focus


Greg BabayaDirector – Investment BankingEnergy Sector focusProject Finance


Jonathan Wood Director – Project Finance Infrastructure sector focus


Corporate and Investment Banking Division of Standard Bank

3 Simmonds Street Standard Bank CentreJohannesburg 2001South Africa

Address

Documents

Lessons Learned in South Africa