Narrative
Full Description
Project narrative
In 2014, the Industrial and Commercial Bank of China (ICBC) and the Government of Ethiopia signed a $60 million buyer’s credit loan agreement for the Optic Fiber Ground Wire Network (OPGW) Project. The borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds of the loan to partially finance two commercial contracts: a $37 million commercial contract that Ethiopian Electric Power (EEP) signed with ZTE Corporation in May 2013 and a commercial contract that EEP signed with Huawei Technologies Co., Ltd. in 2014. The purpose of the project was to install 1600 kilometers (km) of Optical Ground Wire (OPGW) on the country’s existing network of power transmission lines. The optically coated fiber wires that OPGW is made of serves as communications and protection shield against lightning. The 1600 km nationwide network was expected to connect substations such as Meqelle, Ashegoda, Bahir Dar, Alamata and Addis Ababa. ZTE Corporation and Huawei Technologies Co., Ltd. were the EPC contractors responsible for project implementation. ZTE Corporation was responsible for the northern part of the OPGW network. Huawei Technologies Co., Ltd. was responsible for the central, southern, southwestern and western parts of the OPGW network. ZTE commenced work on or around February 2015 and concluded work in July 2016. However, Huawei Technologies Co., Ltd. had not completed its project component as of July 2016. The project, which was originally expected to reach completion by August 2016, was ultimately completed and put into operation in 2017.
Staff comments
1. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Ethiopia was 1.6824 years in 2014. AidData estimates the grace period of the CET loan by using this figure. See https://www.dropbox.com/scl/fi/g794svts1vdwnvksjllsh/August-2024-IDS-Download-Ethiopia-s-Borrowings-and-Borrowing-Terms-from-Private-Sector-PRC-Creditors.xlsx?rlkey=i6j0mqp1jrx5en6xll3ebgl3g&dl=0. 2. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Ethiopia was 11.3387 years in 2014. AidData estimates the maturity of the CET loan by using this figure. See https://www.dropbox.com/scl/fi/g794svts1vdwnvksjllsh/August-2024-IDS-Download-Ethiopia-s-Borrowings-and-Borrowing-Terms-from-Private-Sector-PRC-Creditors.xlsx?rlkey=i6j0mqp1jrx5en6xll3ebgl3g&dl=0. 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Ethiopia was 1.1836% in 2014. AidData estimates the interest rate of the CET loan by using this figure. See https://www.dropbox.com/scl/fi/g794svts1vdwnvksjllsh/August-2024-IDS-Download-Ethiopia-s-Borrowings-and-Borrowing-Terms-from-Private-Sector-PRC-Creditors.xlsx?rlkey=i6j0mqp1jrx5en6xll3ebgl3g&dl=0. 4. This ICBC loan from was not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor was it included it in the Chinese Loans to Africa (CLA) Database — that is maintained by Boston University's Global Development Policy Center — as of August 2024. 5. One source indicates that the project was supported by a vendor financing (supplier’s credit) agreement. This issue warrants further investigation. 6. Abay Tesfaye coordinated the OPGW project on the ZTE side.