China Eximbank provides RMB 3.53 billion overseas investment loan for 246 MW Stung Tatay Hydroelectric Power Plant Project

On January 18, 2017, China National Heavy Machinery Corporation (CHMC) and the Cambodian Ministry of Mines and Energy (MME) signed a feasibility study agreement regarding the 246 MW Stung Tatay Hydroelectric Power Plant Project. The feasibility report was completed in June 2007. It was conducted by two Chinese firms: China Jikan Research Institute of Engineering Investigations and Design Co., Ltd. and Powerchina Northwest Engineering Corporation Limited. The feasibility report was then reviewed in September 2007 by a group of experts organized by China Hydropower Engineering Consulting Group Co. (CHECC) — a subsidiary of China Electric Power Construction Group Co., Ltd. — and again in February 2008 by Cambodia’s MME. Then, in June 2008, China National Heavy Machinery Corporation (CHMC) and the Cambodian Government signed a build-operate and transfer (BOT) agreement regarding the 246MW Stung Tatay Hydroelectric Power Plant Project. The 42 year agreement includes a 5-year construction period (1 year for preparation and 4 years for construction) and a 37-year operating period. In addition, an execution agreement, power purchase agreement (PPA), and BOT land lease agreement were signed by CHMC, Cambodia’s Ministry of Economy and Finance, Cambodia’s MME, and Electricité du Cambodge (EDC) — a Cambodian state-owned power company — in June 2008. On November 17, 2008, China Export & Credit Insurance Corporation (Sinosure) issued a letter of interest, which conveyed its willingness to provide insurance for the $540 million project. Two months later, on January 12, 2009, China Eximbank issued a letter of interest, which conveyed its willingness to provide a loan for the 246 MW Stung Tatay Hydroelectric Power Plant Project. Then, in August 2009, China’s National Development and Reform Commission formally approved CHMC’s investment in the 246MW Stung Tatay Hydroelectric Power Plant Project, which enabled China Eximbank to grant credit support to the project. On June 9, 2010, China Eximbank and Cambodian Tatay Hydropower Limited (CTHL or 柬埔寨達岱水電有限公司) — a special purpose vehicle and project company that is wholly owned by another special purpose vehicle called Beijing Sanlian International Investment Co., Ltd., which in turn is owned by China National Heavy Machinery Corporation (93.13% equity stake) and CHINT Group (6.88% equity stake) — signed an overseas investment loan (境外投资贷款) agreement worth RMB 3,533,622,000 for the 246 MW Stung Tatay Hydroelectric Power Plant Project. The loan was issued in three tranches worth RMB 1,349,831,300, RMB 1,195,191,300, and RMB 988,599,400 yuan, respectively. The borrowing terms of the loan are unknown. The parties also signed a mortgage agreement, stipulating that CTHL would provide a mortgage guarantee for all its properties (tangible or intangible) and all rights (existing or in the future) to China Eximbank. Sinosure also provided insurance for the overseas investment loan. The proceeds of the China Eximbank loan were to be used by the borrower to finance a commercial (EPC) contract that it signed with China Gezhouba Group Company Limited (CGGC) on February 10, 2010. The purpose of the project was to construct a hydroelectric power plant with a new reservoir (whose water surface area is 16,000,000m2 with a power density of 15.375W/m2) downstream of the Tatay River in Thma Bang District and Koh Kong Province and thereby generate power from clean renewable hydropower in Koh Kong Province and contribute to the sustainability of the Phnom Penh Power Grid. It involved the installation of 3 sets of turbine and generators (3×82MW), which amount to a total capacity of 246MW and a total net electricity supply of 857,300MWh (to be sold to the Phnom Penh Power Grid). It relied upon technology manufactured by Zhejiang Fuchunjiang Hydropower Equipments Co., Ltd in China. The project was a diversion type hydropower station. Two dams were constructed to form a new reservoir. The concrete face rock-fill dam was located on the main stream of Tatay river and the auxiliary dam was located in Stung Kep River which is a tributary of the Tatay River. The three-opening bank spillway was located on the left bank of the Stung Kep River. The headrace power system and the river-side ground powerhouse were located at the left bank of the Tatay River; access roads to the dam crest and project site were provided on the left bank. The maximum height of the main dam located on the main stream was 110 meters, and the maximum height of the dam located on the Stung Kep River was 77 meters. A new reservoir was formed with the water surface of 16,000,000m2 and the power density is 15.375W/m2 . The designed net water head for the power generation was 188 meters. The power generated by the plant was to be routed to the 230kV O-Saom Substation though a 65km 230kV transmission line to Phnom Penh power grid. The project required the excavation of 7 million m3 of earth and 900,000 m3 of stone, for an active water storage capacity estimated at 322 m3 and an overall reservoir capacity of 439 million m3. The project is located in Thmabang District within Koh Kong (Khétt Kaôh Kông) Province, which has central geographical coordinates at powerhouse: 103°10′11″E, 11°35′23″N; dam on Tatay River: 103°15′44″E, 11°37′46″N (i.e. powerhouse: 103.1697°E, 11.5897°N; dam on Tatay River: 103.2622°E, 11.6294°N). The dam site of the proposed project is 1.4 km upstream of the junction between Tatay River and its tributary named Stung Kep and 40km away from Koh Kong City, the capital of Koh Kong Province. China Gezhouba Group Company Limited (CGGC or 中国葛洲坝集团股份有限公司) was the general EPC contractor responsible for project implementation. However, Zhejiang Fuchunjiang Hydropower Equipment Co., Ltd., a subsidiary of Zhefu Holding Group Ltd., was a subcontractor responsible for the dam’s three 82MW generators. In June 2009, preliminary results from the project’s environmental impact assessment (EIA), conducted by Key Consultants Cambodia (KCC) on behalf of CTHL, were released at a public forum. The full EIA was completed in September 2010. Then, in February 2010, it was announced that CGGC had won the construction contract bid. A formal groundbreaking ceremony took place on May 21, 2009; however, construction did not begin until March 29, 2010. Then, on November 5, 2010, Mr. Li Ruogu, President of China Eximbank conducted a project site inspection. The main dam was finished before the 2011 rainy season, and the auxiliary dam and spillway capacity were completed one year later. The main dam was finished before the 2011 rainy season, and the auxiliary dam and spillway capacity were completed one year later. In 2012, the European consulting firm Pöyry accepted a two-year contract with CTHL to provide monitoring of dam engineering, design, construction, quality, materials, and safety until 2014. As of February 8, 2012, construction was reportedly 20% complete. The access tunnel was completed in February 2013. Then, on June 23, 2013, Cambodia experienced 50-year monsoonal rains, flooding the project and suspending much of the construction. CHMC quickly deployed rescue workers to move construction equipment and build dikes. By the next day, the flood was under control and the damage contained. By the fall of 2013, the main dam passed the gate-closing requirements as determined by a Chinese team of experts and reviewed by Pöyry. After approval, the gate was closed and water storage officially began on November 16, 2013. The diversion tunnels for both dams were also finished in November 2013. The originally expected project completion date was November 30, 2013; however, the first of the dam’s three 82MW generators did not begin to produce electricity until August 13, 2014. CHMC Board Chairman and President Mr. Lu Wenjun, and Mr. Zhu Xu attended a grid connection and commissioning ceremony on August 13, 2014. By December 2015, all three 82MW generators were active and the dam was fully operational. A project acceptance and power generation ceremony took place on December 23, 2015. The ceremony was attended by both Prime Minister Hun Sen and Chinese Ambassador to Cambodia Bu Jianguo. Then, in November 2019, China Eximbank conducted an on-site, post-loan inspection. Under terms of a Power Purchase Agreement (PPA), China National Heavy Machinery Corporation (CHMC), the majority shareholder of project owner and operator CTHL’s parent company, sells the electricity generated by the power plant at 7.45 cents per kilowatt-hour to EDC, thereby generating approximately $12 million of tax revenue a year. All electric power generated by the hydropower station is sent to the Phnom Penh-Battambang transmission and distribution lines. Since operationalization, the dam’s three generators have had an average annual production capacity of 849 GW*h14 that, in 2020, represented almost 24 percent of Cambodia’s total hydropower generation (3,493 GW*h) and 10 percent of Cambodia’s total domestic electricity production (8,513 GW*h). The 246MW Stung Tatay Hydroelectric Power Plant Project qualified for Certified Emission Reduction (CER) credits via the CDM under the UNFCCC as a renewable power source. The CDM credit system projected the dam would provide an annual greenhouse gas emission reduction of 393,329 tons of CO2 equivalents. The CER credits guaranteed by the project were then sold to the Netherlands via Gazprom Marketing & Trading Singapore between September 2013 and 2020. The project was recently re-certified by Shenzhen CTI International Certification to allow the same credits to be sold to the Netherlands for the next seven years between September 2020 to August 2027.

Additional details

1. This project is also known as the 3 x 82 MW Stung Tatay Hydroelectric Project and the Tatay River Hydropower Dam (TRHD) Project. The Chinese project title is 柬埔寨达岱河水电站 or 司承建的柬埔寨达岱河水电 or 柬埔寨达岱水电站BOT项目 or 柬埔寨达岱水电站项目 or 供的柬埔寨达岱 BOT 水电站项目. 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identified the Government of Cambodia as the borrower of the China Eximbank loan that supported this project; however, multiple official sources identify CTHL as the borrower. 3. China National Heavy Machinery Corporation (CHMC) is a subsidiary of Sinomach. 4. Some sources refer to the EPC contractor as Gezhouba Group No.1 Engineering Co.,Ltd. (葛洲坝集团第一工程有限公司).

Number of official sources

25

Number of total sources

47