China Eximbank provides $551.08 million debt financing package for 147MW Adjarala Hydroelectric Power Plant Project (Linked to Record ID#58671, #58674, and #68762)

Project narrative

In 2004, the Government of Togo and the Government of Benin hoped to begin construction of the 147MW Adjarala Hydroelectric Power Plant but a disagreement over the terms of financing took years to resolve. On January 26, 2008, an MoU was signed between China Hydropower Group International Corporation and the Government of Benin for the possible construction of the power plant. In 2009, Sinohydro and Communauté Electrique du Bénin (CEB) — an inter-governmental organization (owned by the Government of Benin and the Government of Togo) that is responsible for developing electricity infrastructure in Togo and Benin and reducing these countries’ dependence upon Ghana for energy imports — signed a $388 million commercial contract for the 47MW Adjarala Hydroelectric Power Plant Project. However, in order to cover additional project costs, the Government of Benin turned to international donor organizations — including the World Bank, African Development Bank, and others — in 2013. These organizations expressed initial interest in financing the project, seemingly until the United States began to oppose funding for large new dams worldwide. Ultimately, the international donor community opted not to support the project and China Eximbank subsequently pledged a financing package worth $551.08 million (captured via this umbrella project, ID#2170). On December 15, 2015, China Eximbank and the Government of Benin signed a $211.31 million preferential buyer’s credit (PBC) agreement for the Adjarala Hydroelectric Power Plant Project. The PBC carries the following terms: 20-year maturity, 7-year grace period, and a 2% interest rate . Then, on July 12, 2016, China Eximbank and the Government of Benin signed an RMB 400 million government concessional loan (GCL) agreement for the Adjarala Hydroelectric Power Plant Project. The GCL carries the following terms: 20-year maturity, 7-year grace period, and a 2% interest rate. China Eximbank also signed a $61 million loan agreement with the Government of Togo on May 23, 2016 for this project. The PBC is captured in Record ID#58674 and the GCL is captured in Record ID#58671. The loan issued to the Government of Togo is captured in Record ID#68762. The proceeds from these three loans were on-lent by the Government of Benin and the Government of Togo to CEB. CEB used these loan proceeds to finance a FCFA 265,814,526,897 commercial contract that it signed with Sinohydro on April 25, 2014. This project involves the construction of a dam in Adjarala, which is located approximately 100 km downstream of the 65MW Nangbéto hydropower plant on the Mono River. The dam will stand 40 meters tall, with a 3.7 long kilometer reservoir. The project also involves the construction of 252 kilometers of 161 KV high voltage power transmission lines, water diversion systems, plants, access roads and other ancillary facilities. The ultimate objective of the project is to strengthen regional energy interconnection and alleviate electric power shortages in Benin and Togo. Sinohydro is the contractor responsible for implementation. A groundbreaking ceremony took place on December 26, 2015. Then, in December 2016, the project was suspended after the Togolese Minister of Economy and Finance announced that there were insufficient financial resources to complete the project. The project resumed in January 2017, and as of September 2017 it was still under construction.