Company:
Niko Resources Ltd. is a junior exploration and production company based in Calgary, Canada and listed on the Toronto Stock Exchange with a focus on producing natural gas in the South Asia region.

Shareholding:
Niko has a diverse shareholding structure. The Chairman of Board and CEO Ed Sampson owns 5.9% of the Company’s shares. The remaining shares are owned by the public and some institutional investors.

The total financing of $340 million will be used to fund the Company’s capital expenditures in India and Bangladesh through 2016 and the refinancing of some outstanding debt. The proposed IFC financing is up to $80 million.

80.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity	10.0

* These investment figures are indicative

The capital expenditure program is for the work-over of wells in the D1-D3, MA and the development of the R-cluster and Satellite fields in the Krishna-Godavari Basin off the eastern coast of India, and, the development work for Block 9 in central Bangladesh, between Dhaka and Comilla.

The South Asian countries have been experiencing natural gas supply shortages due to growing demand and reduction in domestic gas supply. Massive blackouts in India have hampered its growth, which is at a decade-low. From a national security point of view, India plants to double the proportion of gas in its energy mix by 2020 from the current 10% share (coal accounts for 56% of India''s primary energy need and oil 26%), but in the context of declining gas production from domestic fields, meeting this target will prove challenging. Hoping to boost its natural gas supply and help fix the country''s chronic power shortages, India recently doubled the gas prices from April 2014 onward to around $8.40/mmbtu. In Bangladesh, gas shortage stands around 500-600 mmcfpd, which results in 600 - 1200 MW of load-shedding, a situation which deteriorates during irrigation seasons, when the demand-supply gap reaches up to 1500 MW. In addition, with 6% of the entire population having access to natural gas and 49% connected to the power grid, most Bangladeshi households in rural areas (99%) as well as urban areas (66%) use biomass for cooking, and the inefficient and poorly ventilated clay stoves have caused 46,000 women and children die each year as a direct result of exposure to indoor air pollution, while many more suffer from respiratory diseases.

The proposed investment will support an important junior E&P player in the region in their effort to develop and produce natural gas to meet the growing demand in the region.

The successful implementation of the plan will have a positive and lasting impact on the Company''s culture and way of doing business.

The project is expected to (i) support the development of natural gas resources in South Asia as a cleaner primary source of fuel to replace coal, oil and biomass, (ii) support the restructuring of one of the few junior E&P companies with a focus on South and Southeast Asia and improve performance in E&S and operations, (iii) help promote and integrate cleaner and more sustainable environmental practices in the region, and, (iv) contribute to increased fiscal revenues for the host governments.

IFC has reviewed the governance and transparency for Bangladesh and India by consulting the World Bank''s metrics and generally holds the view that any governance risks to project benefits are contained, especially as the project''s key impacts are non-fiscal in nature and specifically are in providing support to develop natural gas resources, a cleaner source of fuel.

IFC will play a key role as an anchor investor to mobilize financing in a difficult investment climate and to support the Company as it undertakes a restructuring to ensure its financial sustainability. IFC will apply its experience gained from working with junior oil and gas companies in developing countries to help enhance the E&S standards of Niko. This will include helping to develop an integrated corporate health, safety, environmental and social management system, including policies and procedures consistent with IFC Performance Standards requirements.

This is a category A project mainly due to the potential for significant and diverse impacts which could be associated with the exploration and development activities in both the Company’s managed assets (operated assets and majority interest assets) and non-managed assets (minority interest assets). In the non-managed assets, Niko has and will have limited control and/or influence over its partners’ decisions. Because of the corporate nature of this proposed investment, the Performance Standards (PSs) that are relevant are PS1: Assessment and Management of Environmental and Social Risks and Impacts; and PS2: Labor and Working Conditions. The processes of how Niko will address Performance Standards 3 through 8 is described within the detailed PS1 narrative presented in the project’s Environmental and Social Review Summary (ESRS) and represents the framework that will be applied by the Company at corporate level as the use of proceeds is determined on an asset-by-asset basis. Please refer to the project’s ESRS for further information.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.