China Eximbank provides $292 million buyer’s credit loan for Bui Dam Construction Project (linked to #30709, #30086 and #30801)

On September 25, 2007, China Eximbank and the Government of Ghana signed a buyer’s credit loan (BCL) agreement worth $292 million for the Bui Dam Construction Project. Then, on September 3, 2008, China Eximbank and the Government of Ghana signed a government concessional loan (GCL) agreement worth RMB 2.1 billion. The BCL carried the following terms: 17 year maturity, 5-year grace period, and an interest rate of CIRR plus a margin of 0.75% (6.13%). The GCL carried the following terms: 2% interest rate, 20 year maturity, and a 7 year grace period. The GCL is captured in Project ID#30810 and the BCL is captured in this project entry.The BCL was collateralized with (a) net revenue from a Power Purchase Agreement (PPA) between Bui Power Authority — an organization with a mandate to plan, execute and manage the Bui Hydroelectric Project — and the Electricity Company of Ghana (ECG) for the purchase of the energy to be generated from the Bui hydroelectric power plant, and (b) receivables from the Ghana Cocoa Board’s sale of cocoa beans to Genertec International Corporation of Beijing. However, the GCL was not collateralized; it was backed by the full faith and credit of the Government of Ghana. Two additional loans from China Eximbank were negotiated on April 30, 2012 to pay for cost overruns on the dam: a $75.4 million loan with a maturity of 20 years, a 5 year grace period, and a 2% interest rate and a $76.2 million loan with a maturity of 14 years, a 2 year grace period, and a 0% interest rate. It is unknown if either of these loans were collateralized. The $75.4 million loan is captured in Project ID#30086 and the $76.2 million loan is captured in Project ID#30709. Loan repayment for the BCL captured by this project entry involved a cocoa sales agreement between Genertec Corporation of China and the Ghana Cocoa Board (Cocobod) for up to 30,000 metric tons of cocoa beans per year until the dam became operational. The cocoa beans were sold at the prevailing market price rather than a fixed price, and the proceeds were placed in an escrow account with China Eximbank to facilitate loan repayment (and provide a source of security for the BCL). Then, once the dam was operational, the cocoa agreement ended and 85% of the proceeds from sales of energy generated by the Bui hydroelectric power plant were placed in an escrow account held by China EximBank to facilitate loan repayment (and provide a source of security for the BCL). Any excess funds in the escrow account could be withdrawn by Government Ghana, or they could stay in the account and earn interest. The price for the future electricity was tentatively negotiated to fall within a range of $0.035 and $0.055 cents per kilowatt-hour (kW/h). According to the World Bank, the average electricity tariff in Africa is much higher — at $0.13 per kW/h. The Bui Dam Construction Project had six components: (1) a roller Compacted Concrete (RCC) gravity dam incorporating a 5-bay spillway; (2) three penstocks in the middle of the dam; (3) a powerhouse at the toe of the dam on the left bank; (4) two rock fill saddle dams on the right bank; (5) a switchyard; and (6) 276 km of transmission lines; and a permanent bridge downstream of the dam. Sinohydro was the contractor responsible for project implementation. Its work was overseen by Bui Power Authority. The dam was designed by the French engineering firm Coyne et Bellier, which also served as the consulting engineers on the project. A groundbreaking ceremony was held on August 24, 2007. However, construction did not begin until December 2, 2008. Then, on May 3, 2013, the first generator was inaugurated. The dam was inaugurated on December 19, 2013. However, the project was not officially completed and handed over to the Ghanaian authorities until November 28, 2016.

Additional details

The Chinese project title is 加纳布维水电站项目. Some sources suggest that an interest rate of CIRR plus a margin of 1.075% applied to the BCL from China Eximbank.

Number of official sources

24

Number of unofficial sources

20