Narrative
Full Description
Project narrative
According to Ethiopia's Ministry of Finance and Economic Development (MOFED), Ethiopian Electric Power Corporation (EEPCo) signed a $460,070,000 loan agreement with the Industrial and Commercial Bank of China (ICBC) for the Gibe III Hydro Power Generating Set Project. The estimated borrowing terms of the loan included an interest rate of 2.9872%, a grace period of 3.1666 years, and a maturity of 13.7792 years. The purpose of the project was to support the installation of power generators at the Gibe III hydroelectric power plant, which is located along the lower course of the Omo River, some 155 km downstream of the Gilgel Gibe II Project. More specifically, the project site is located in the Southern Nations Nationalities & Peoples Regional State. The nearest big town in the area is Wolaita Sodo town, which is located some 80 km east of the project site. The project area is characterized by a deep gorge where the Omo River meanders. The project was completed and put into operation in September 2013.
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 3.1666 years in 2013. 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 13.7792 years in 2013. 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 2.9872% in 2013. 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. According to the World Bank's Debtor Reporting System (DRS), ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Ethiopia was $1,802,970,000 in 2013. $1,802,970,000 is nearly identical to the sum of the face value of the $1,002,970,414 CET loan that supported the 500kV Power Transmission Line of the Great Ethiopian Renaissance Dam (GERD) Project, the $250 million ZTE supplier’s credit that supported the Telecom Transformation and Expansion 6 Circles Project (with support from a China Eximbank export seller’s credit), the $460.07 million ICBC loan that support the Gibe III Hydro Power Generating Set Project, and the $88.51 million loan (from China Eximbank and potentially other Chinese creditors) that supported the Gibe III Hydro Power Transmission and Transformation Substation Project. 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 and https://www.sciedupress.com/journal/index.php/jms/article/viewFile/25488/16079. 5. This ICBC loan 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. 6. It was originally envisaged that the European Investment Bank (EIB) and the African Development Bank (AFDB) would help financed the EUR 1.47 billion Gibe III Hydropower Project (https://web.archive.org/web/20160306153555/http://www.gibe3.com.et/Financer.html). However, ICBC stepped into the breach when the EIB and the AFDB withdrew their support. 7. The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143123101610. The AMP indicates that 15 loan disbursements worth ETB 21,904,463,534 ($1,642,834,765.05) were made in support of the project. This amount far exceeds the face value of the ICBC loan that was signed on June 20, 2010 (as captured via Record ID#34447). Therefore, it likely captures the $470 million ICBC loan from 2010 and the $460.07 million ICBC loan from 2013. This issue warrants further investigation. 8. China Eximbank financed the Gibe III-Addis Ababa Power Transmission Lines and Substations Project (as captured via Record ID#59363 and Record ID#59365) and the Gibe III Hydro Power Transmission and Transformation Substation Project (as captured via Record ID#105831). 9. The face value of the loan ($460.07 million) is identified by Ethiopia's Ministry of Finance and Economic Development (MOFED) via the following sources (https://www.sciedupress.com/journal/index.php/jms/article/viewFile/25488/16079 and https://www.dropbox.com/scl/fi/5nwg72mj7unyc41tgsmh1/List-of-Ethiopia-China-Cooperation-Major-Projects-from-Ethiopia-s-Ministry-of-Finance-September-2024.xlsx?rlkey=v9vjryd8kmq0bzshgocuma6mb&dl=0).