ICBC provides $102 million buyer's credit loan for Rural Electrification Northern Region Project

Project narrative

On January 11, 2012, the Industrial and Commercial Bank of China (ICBC) and the Government of Ghana signed a $102 million buyer's credit loan agreement for the Rural Electrification Northern Region Project. The loan carries the following borrowing terms: a maturity of 15 years, a grace period of 5 years, and an annual interest rate of 6-month LIBOR plus a 0.3% margin. The loan’s (principal) amount outstanding was GHS 409,620,000 ($73,146,428) as of December 31, 2020 and GHS 336,500,000 ($64,711,538) as of December 31, 2021. Hunan Construction Engineering Group Corporation was the contractor responsible for implementation. The total contract cost of the project was reported to be $120 million. HNCEG began project scoping in 2009 while working with the Ministry of Finance and Ministry of Energy. The project was completed in November 2016. There are some indications that the ICBC loan for the Rural Electrification Northern Region Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). There are some indications that the China Eximbank loan for Phase 1 of the Kpong Water Expansion Supply Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). Then, on December 19, 2022, the Government of Ghana announced a sovereign default, suspending debt service on its Eurobonds, its commercial loans, and most of its bilateral loans.