The guarantees for Sankofa Gas Project, the largest amount ever pledged by the World Bank, form part of a wider programme of support based around technical assistance for energy sector reform.

These investment guarantees are expected to unlock $7.9bn from private firms into offshore natural gas projects, which would represent the biggest foreign direct investment in Ghana’s history.

Ghana is susceptible to economic shocks in part due to the challenges being faced by the country’s power sector, which is subject to water shortages for hydropower, erratic gas supplies from external sources, and delays in the development of domestic gas resources. The country’s government has spent more than $500m fuel subsidies to the power sector in recent years, which represents a significant drain on public resources.

The offshore Sankofa Gas Project is expected to produce up to 1,000 megawatts of clean power generation, replacing polluting and expensive oil-burning electricity. Once the field starts to produce gas in early 2018, Ghana will be able to reduce its oil imports by up to 12 million barrels a year and cut carbon emissions by 1.6 million metric tons of CO2 annually.

Ghana’s finance minister Seth Terkper said the project was a game changer for the country.

“This project is an essential element of the drive towards consolidating our middle income status, and will help secure our natural gas resources for a more affordable and reliable power supply. This will help boost economic activity and generate more jobs for Ghanaians,” he said. 

The project is a good example of how Africa can address its infrastructure challenges and lay the foundation for sustained economic growth World Bank vice president Makhtar Diop said.

“Innovative use of the Bank’s guarantee program that helps mitigate the perception of risk and mobilizes private investment can help unlock billions of much-needed financing for large-scale infrastructure projects on the continent.”