China Eximbank provides $12.65 million loan for FGG-1 230kV Finchaa-Ghedo-Gefersa Power Transmission Project (Linked to Record ID#45047)

Project narrative

In November 2006, China Eximbank and the Government of Ethiopia’s Ministry of Finance and Economic Development signed a $500 million buyer’s credit facility agreement (互惠贷款) — also known as a master loan framework agreement and a master facility agreement — for an unspecified set of development projects. All subsidiary loans approved under the buyer’s credit facility agreement (captured via Record ID#45047) carried the following borrowing terms: a 13-year maturity, a 4-year grace period, and an interest rate of LIBOR plus a 2-3% margin. All of the subsidiary loans were secured with (i.e., collateralized against) Ethiopia's export receipts to China, which at the time primarily consisted of sesame seed export receipts. The buyer’s credit facility agreement also required that all Ethiopian exports (export receipts) to China to be overseen by the Commercial Bank of Ethiopia (CBE), the country’s largest state-owned financial institution. As a source of collateral, the borrower was required to maintain a minimum cash balance in a debt service reserve account (DSRA) at the CBE. The cash balance of the DSRA (escrow account) was $284,368,041 as of June 30, 2011, $308,914,767 as of June 30, 2012, $300,000,000 as of June 30, 2016, $300,000,000 as of June 30, 2017, $300,000,000 (ETB 8,260,410,000) as of June 30, 2018, $300,000,000 as of June 30, 2019, ETB 10,599,600,000 as of June 30, 2020, ETB 8,058,726,059 as of June 30, 2021, ETB 10,722,750,953 as of June 30, 2022, and ETB 9,832,603,839 as of June 30, 2023. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. China Eximbank, CBE, and the Ethiopian Electric Power Corporation (EEPCo) signed a subsidiary buyer’s credit loan worth $12,657,046.86 for the FGG-1 230kV Finchaa-Ghedo-Gefersa Power Transmission Project on February 24, 2008. The loan's first and last scheduled principal payment dates were December 31, 2011 and March 31, 2021, respectively. Its first and last scheduled interest payment dates were July 1, 2009 and March 31, 2021, respectively. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of a ETB 135,000,061.80 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China Gezhouba Group Company (CGGC). The project involved the acquisition and installation of equipment — including transformers, outgoing line bays, and transformers bays — at the Fincha’a-1, Fincha’a-2, Ghedo, and Gefersa substations. CGGC was the general EPC contractor responsible for project implementation. The project was completed and put into operation in 2011.