China Eximbank provides RMB 154.8 million government concessional loan for Phase 1 of Kenya Power Distribution System Modernization Project (Linked to Project ID#16392, #58359, 92446)

In August 2005, the Chinese Government and the Government of Kenya signed a preferential loan framework agreement for Phase 1 of the Kenya Power Distribution System Modernization and Strengthening Project. Then, on January 23, 2006, China Eximbank signed an RMB 161,028,810 government concessional loan (GCL) agreement [CHINA EXIMBANK No GCL 2006(02)(144)] with the Government of Kenya for Phase 1 of the Kenya Power Distribution System Modernization and Strengthening Project. The face value of the loan was subsequently revised to RMB 154,835,394.23. The loan carried the following borrowing terms: a 2% interest rate, a 6.75-year grace period, and a 20.25-year maturity (final maturity date: March 21, 2026). The borrower was expected to make semi-annual repayments to the lender between September 23, 2012 and March 21, 2026. The Government of Kenya, in turn, on-lent the proceeds of the loan to a Kenyan state-owned enterprise called Kenya Power and Lighting Company (KPLC) at a 2.5% interest rate. KPLC later signed a novation agreement, which transferred ownership of the project and loan repayment responsibility to another Kenyan state-owned enterprise called Kenya Electricity Transmission Company Limited (KETRACO). The borrower made principal repayments worth RMB 6,193,415.70 between July 1, 2020 and June 30, 2021 and RMB 12,386,831.54 between July 1, 2021 and June 30, 2022. The loan’s amount outstanding was RMB 74,320.989.16 as of June 30, 2020, RMB 61,934,157.62 as of June 30, 2021, and RMB 49,547,326.08 as of June 30, 2022. The Government of Kenya’s External Public Debt Register suggests that this loan was rescheduled in early 2021. The purpose of the project was to construct (1) a 61km, 132kV transmission line from the Chemosit to Kisii substations and (2) a 122km, 132kV transmission line from Meru to Embu -- which then connects all the way to the Kamburu hydropower station (see Project ID#58707). China CAMC Engineering Co. Ltd. (CAMCE) was the contractor responsible for project implementation. Works were originally expected to begin in July 2006 and end in July 2008. However, works actually began in July 2007 and were officially completed on November 24, 2010. There are some indications that the China Eximbank government concessional loan for Phase 1 of the Kenya Power Distribution System Modernization Project financially underperformed vis-a-vis the original expectations of the lender. On March 21, 2021, China Eximbank and the Government of Kenya signed a debt suspension agreement (captured via Project ID#92446). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due during the March 21, 2021-June 30, 2021 period under two government concessional loan (GCL) agreements with outstanding balances: the loan for Phase 1 of the Kenya Power Distribution System Modernization and Strengthening Project and the loan for the Rural Telecommunication Development Project.

Additional details

1. This project is also known as the Chemositsit-Kisii-Meru Power Distribution Project and the Chinese project title is 肯尼亚城网改造项目一期工. 2. Some sources suggest that the Government of Kenya issued a sovereign guarantee in support of the China Eximbank loan. This issue warrants further investigation. 3. According to Kenya Electronic Project Management Information System (e-ProMIS), the Chinese Government issued another $41,182,400 loan for the Kenya Power Distribution System Modernization Project in February 2012 (see Project ID#58359). However, it is unclear if this commitment was ever finalized and if it provided supplemental funding for the project’s first phase (captured via Project ID#1043) or second phase (captured via Project ID#16392). The project identification and reference numbers in the Kenya Electronic Project Management Information System (e-ProMIS) are 2012/053905 and KPLC010, respectively. 4. The identification number for this China Eximbank loan in the Kenyan National Treasury’s external public debt register is 2006007 (2006007_1). 5. The amounts outstanding and repayments data are drawn from the Kenyan Treasury’s External Public Debt Register. See https://www.dropbox.com/s/549ixt2gj1jbjvi/External-Public-Debt-Register-as-at-End-June-2022.pdf?dl=0 and https://www.dropbox.com/s/0et4jg1qfg1bo7r/External-Public-Debt-Register-as-at-End-June-2021.pdf?dl=0 and https://www.dropbox.com/s/233j706743q7f1g/External-Public-Debt-Register-as-at-End-June-2020.pdf?dl=0 and https://www.dropbox.com/s/qkoybr9ja0ohemy/External-Public-Debt-Register-as-at-End-June-2009.pdf?dl=0 and https://www.dropbox.com/s/thy3s6ggjcjd97z/External-Public-Debt-Register-as-at-End-June-2012.pdf?dl=0 and https://www.dropbox.com/s/fzbfq01vas6m0i9/External-Public-Debt-Register-as-at-End-June-2019.pdf?dl=0 and https://www.dropbox.com/s/ennrl6d4zd2nizs/External-Public-Debt-Register-as-at-End-June-2018.pdf?dl=0 and https://www.dropbox.com/s/8ibazrj1a8oho2d/External-Public-Debt-Register-as-at-End-June-2017.pdf?dl=0 and https://www.dropbox.com/s/wdbjl0wq49i09x1/External-Public-Debt-Register-as-at-End-June-2015.pdf?dl=0 6. Project ID#16392 captures a China Eximbank loan for Phase 2 of the project.

Number of official sources

12

Number of total sources

18