China Development Bank provides $70 million loan for 41.7MW Nadarivatu Hydropower Project

On January 19, 2009, China Development Bank and Fiji Electricity Authority (FEA) — a state-owned electricity company in Fiji — signed a $70 million term loan agreement for the 41.7MW Nadarivatu Hydropower Project. The loan is subject to an interest rate of 7.15% per annum for 60 months from the date of agreement and after 60 months the interest rate is set to LIBOR plus a margin of 3.2% per annum. The loan is repayable over a period of 14 years in 24 equal semi-annual installments. The first loan repayment was scheduled for March 20, 2012 (3 year grace period) and the last loan repayment was scheduled for September 20, 2023. Fiji’s Ministry of Finance issued a sovereign guarantee in support of the loan and on behalf of the Government of Fiji. The borrower was to use the proceeds of the loan to partially finance a $124.8 million commercial contract that it signed with Sinohydro Corporation Limited on September 8, 2008. On January 27, 2009, the FEA made the first drawdown from the China Development Bank loan amounting to $43.8 million. Immediately upon receipt of the loan proceeds from China Development Bank, on January 28, 2009, FEA sold $13.8 million to Reserve Bank of Fiji, thereby settling the FEA’s commitment to Reserve Bank of Fiji (see Staff Note 2). The balance of the loan proceeds ($30 million) was placed in short term foreign currency term deposits with ANZ Bank. FEA made its last loan drawdown ($11.2 million) in March 2010 after satisfying all the three debt covenants essential to ensure the loan drawdown. Additional funding for the 41.7MW Nadarivatu Hydropower Project was secured via FEA bonds ($50 million), and ANZ Bank ($30 million). The purpose of this project was to construct the Nadarivatu Dam, also known as the Korolevu Dam, which is a concrete gravity dam on the upper reaches of the Sigatoka River in Buyabuya Village, Nadarivatu District, and Nadroga-Navosa Province. The dam was designed to generate hydroelectric power in a 41.7 megawatts (55,900 hp) run-of-the-river scheme. The 40-meter-high concrete gravity dam, including three radial gates and two sluice gates, diverts water from the confluence of the Nukunuku River and Qaliwana River, which are tributaries of Sigatoka River, through a 3,225 m long headrace/2-meter-diameter buried steel penstock tunnel to a power station along the Ba River to the southwest. The power station contains two 20.85 MW Pelton (with 6 jet-units) turbine-generators with a maximum discharge of 15.0 m3 /s. The drop in elevation between the reservoir and the power station affords a gross head of 335.7 m. A 132 kV, 5-kilometer-long transmission line connects it to the existing FEA’s transmission system through a switching station (known as the Nadarivatu Switching Station). The Nadarivatu Switching Station connects to the national power grid and is situated near the 132kV Wailoa - Vuda transmission line. The design services for the project were undertaken by MWH New Zealand Limited. Detailed plans for the project were developed in 2002; detailed design work and construction of basic infrastructure such as access roads for the 42 MW Nadarivatu hydropower project were completed in 2006. Then, on December 17, 2008, FEA made an advance payment of $43.8 million was made to Sinohydro Corporation Limited, which resulted in it mobilizing a workforce for the construction of the project. Construction began in January 2009. The power station was ultimately commissioned on September 7, 2012, and an inauguration ceremony led by Prime Minister Frank Bainimarama was held a week later on September 14, 2012. The completion of the power station was expected to save the country about 42 million Fiji dollars ($24 million) per year from the importation of diesel fuel. However, the project was not without controversy. In March 2009, local landowners and the Construction Energy and Timber Workers Union (which represented local workers supporting the construction of the power plant) raised concerns over Sinohydro Corporation Limited's non-compliance with the occupational health and safety laws of Fiji. Nadarivatu Landowner Council secretary Misaele Toutou also said that when villagers from five clans started work in January 2009, they were not provided proper safety gear from boots, gloves and helmets. The General Secretary of the Construction Energy and Timber Workers Union said that Sinohydro Corporation Limited was extensively abusing local workers by not providing essential safety gear and proper working conditions that they deserved. He said workers had been exploited and asked to work under dangerous and hazardous conditions without safety clothing and equipment; and directed to get their own safety gear if they wanted jobs on the project. Local employees reportedly staged protests about a lack of compliance with health and safety laws. Union representatives and a local landowners council also wrote to the Immigration Department to ask for explanations about increases in the number of foreign workers.

Additional details

1. This project is also known as 40MW Nadarivalu Hydropower Scheme or Nadarivatu Renewable Hydro Power Project or Nadarivatu Renewable Energy Project. The Chinese project title is 楠德瑞瓦图项目 or 南德瑞瓦图水电站. 2. In relation to the commercial contract that FEA signed with Sinohydro Corporation Limited on September 8, 2008, FEA made an advance payment to Sinohydro Corporation Limited of $43.8 million in December 2008. The advance of $43.8 million is funded by borrowing of US$30 million from ANZ Bank and the balance of $13.8 million was purchased, for short term, from Reserve Bank of Fiji by providing Reserve Bank of Fiji with equivalent Fiji dollars and commitment to repay in US dollars 3. On March 5, 2013, FEA signed a loan agreement with Westpac Banking Corporation (WBC) for the refinancing of $30 million of the China Development Bank loan in Fijian Dollars. Subsequently, on March 20, 2013 the $30 million CDB debt was repaid by WBC and the loan was brought on-shore in Fijian Dollars. This helped FEA manage its risk of exchange rate fluctuations. 4. In 2005, it was expected that this project would be developed by FEA’s joint venture company, Sustainable Energy Limited (SEL), in partnership with Pacific Hydro Limited of Australia, but Pacific Hydro Limited advised FEA that it wished to exit from the Nadarivatu hydropower project. FEA took over the project from SEL when the negotiations were completed.

Number of official sources

14

Number of total sources

23