Source(s) of financing AfDB: 135853875.6 Cofinanced: 4170713980
Implementing Agency: GUINEA ALUMINA CORPORATION, SA
Location: Sangredi & Kamdar Guinea
GAP will represent an investment of incomparable scale for the Guinean economy. The average capital outlay in the two peak years of construction of USD 1.6 billion p.a. eclipses the highest annual level of FDI in the past 20 years of USD 80 million. This project will generate considerable economic benefit to the country in the form of tax revenues (USD 7.2 billion in 2007 prices over the 50-year life of the concession). It will also provide long-term employment opportunities and sizeable associated economic activities, which should yield another USD 1 billion of benefits to the country. Overall, it has been estimated by consultants from the University of Laval that the project will generate a 12% increase in GDP during construction and a 10% increase thereafter (declining to 8% and below after 20 years), relative to a situation where the project is not undertaken.3.22The financial NPV of the cumulative project cashflows (pre-tax and financing) is USD 2.0 billion, using the estimated sponsors' costs of funds of 6.3% in real terms. The value of all taxes accruing from the project to the country using the same discount rate is USD 1.1 billion.The NPV of the resulting cashflows to sponsors and lenders ("the project FNPV") is USD 0.9 billion. As such, the share of project net cashflows accruing to the country is 55% against 45% for the sponsors and lenders.We note that neither the GoG nor any domestic company is exposed to the project risks, which are fully borne by the project sponsors. This distribution of project risks and returns is deemed to be fair.