Project ID: 30241

China Eximbank provides $293.25 million preferential buyer's credit for 153MW Adama Wind Farm II Project (Linked to Project ID#1380)

Commitment amount

$ 330796718.92966914

Adjusted commitment amount

$ 330796718.93

Constant 2021 USD

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Ethiopia

Sector

Energy (Code: 230)

Flow type

Loan

Level of public liability

Central government debt

Financial distress

Yes

Infrastructure

Yes

Category

Intent

Mixed (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2013-03-27

Actual start

2013-06-06

Actual complete

2015-05-18

Geography

Description

On March 27, 2013, China Eximbank and the Government of Ethiopia’s Ministry of Finance and Economic Development signed a $293,250,000 (ETB 5,420,517,560) preferential buyer credit (PBC) agreement for the 153MW Adama Wind Farm II Project. Then, on June 11, 2013, the Ethiopian House of Representatives ratified the PBC agreement under proclamation no. 795/2013. The borrowing terms of the PBC were as follows: a 20 year maturity, an 8 year grace period, and a 2% interest rate. The Government of Ethiopia's Ministry of Finance and Economic Development subsequently signed an on-lending agreement with Ethiopian Electric Power Corporation (EEPCO). The ultimate borrower (EEPCO) was expected to use the proceeds of the PBC to finance approximately 85% of the total cost of a $340 million commercial (EPC) contract between EEPCO and Hydrochina-CGCOC JV, which was signed on October 11, 2012. According to the Government of Ethiopia’s Aid Management Platform (AMP), the $293,250,000 (ETB 5,420,517,560) loan (PBC) achieved a 123% disbursement rate, with China Eximbank making 10 loan disbursements (worth ETB 6,659,539,738) between 2013 and 2016: an ETB 1,306,818,182 disbursement on October 8, 2013, an ETB 517,241,379 disbursement on January 8, 2014, an ETB 1,712,598,425 disbursement on July 8, 2014, an ETB 343,434,343 disbursement on January 8, 2015, an ETB 142,992,012 disbursement on April 8, 2015, an ETB 184,297,042 disbursement on July 8, 2015, an ETB 445,179,744 disbursement on October 7, 2015, an ETB 741,377,956 disbursement on July 7, 2016, an ETB 524,222,698 disbursement on January 7, 2016, and an ETB 741,377,956 disbursement on October 7, 2016. The purpose of the project was to install a 153MW wind farm with 102 turbines near the city of Adama in a range of rocky hills in the Ethiopian highlands 100 kilometers southeast of the capital Addis Ababa. The project also involved the construction of 10 km worth of electricity transmission lines to connect the wind farm to the 230kv grid via the Koka substation. Hydrochina-CGCOC JV — a joint venture between Hydrochina Corporation, and CGC Overseas Construction Co. Ltd. (CGCOC) — was the general EPC contractor responsible for project implementation. Upon completion, it was expected that the Adama II Wind Farm would be able to generate about 476 million kWh electricity every year, thereby meeting over 20% of the electricity needs of the capital city of Ethiopia. It was also expected that by substituting oil power plants of the same scale, the Adama I Wind Farm and Adama II Wind Farm could together save 160,000 tons of fuel oil and reduce almost 600,000 tons of carbon dioxide emissions. Hydrochina Corporation was responsible for the project’s feasibility study. CGCOC was responsible for the project’s mechanical work. Sany Heavy Industry Co., Ltd. — another Chinese company — was responsible for the provision of the wind turbines. Construction started in June 2013. During the construction phase, in order to avoid dust and sand, water was sprayed on the excavated earth. In order to minimize the impact of traffic noise and dust brought by vehicle transportation during construction, Hydrochina-CGCOC JV strictly controlled and managed the driving times and routes. Speed bumps were set up on a windy road to reduce dust blown by fast-driving vehicles. Trees, flowers and plants were grown around the booster stations. Hydrochina-CGCOC JV also built stone drainage and afforested slopes near the assembly site of wind turbines, thereby preventing soil erosion. Local floral and fauna species were reportedly protected. An official inauguration ceremony for the Adama Wind Farm II (Adama II Wind Farm) took place on May 18, 2015. The wind farm was then transferred to the project owner (EEPCO) and put into operation in June 2016. The 153MW Adama Wind Farm II Project reportedly created thousands of jobs for local people during the construction phase and continued to provide hundreds of jobs for local people during the operation phase. There are some indications that the China Eximbank loan for the Adama Wind Farm II Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the Government of Ethiopia’s Aid Management Platform, as of September 2019, ICBC suspended about $67 million worth of loan disbursements 'due to [the] cross-default situation of the country’ (see Project ID#58616). Then, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects and halted project implementation due to Government of Ethiopia’s rapidly dwindling foreign exchange reserves and debt sustainability challenges. Demisu Lemma, the Director of Chinese Cooperation at the Ethiopian Ministry of Finance, noted at the time that the Ethiopian Government was in discussions with China Eximbank about a potential debt rescheduling (that would involved a 5-year maturity extension and a 1-year grace period extension). Then, after considerable delay, the G20 Common Framework (CF) creditor committee for Ethiopia convened in September 2021, with the French Government and the Chinese Government serving as co-chairs. The CF debt rescheduling talks were still ongoing in mid-2023.

Additional details

1. China Eximbank also provided a $99.45 million preferential buyer's credit for the first phase of the Adama Wind Farm Project (as captured via Project ID#1380). 2. This project is also known as the 153MW Adama Wind Power Construction Project, the Adama II Wind Farm Project, and Phase II of the 153MW Adama Wind Power Construction Project. The Chinese project title is 阿伊萨风电项目拟安. 3. The Adama Wind Farm is reportedly the first international wind power project to use Chinese standards and technologies. 4. The AMP system identification number for the project is 87143319101700.

Number of official sources

22

Number of total sources

46

Download the dataset

Details

Cofinanced

No

Direct receiving agencies [Type]

Government of Ethiopia [Government Agency]

Indirect receiving agencies [Type]

Ethiopian Electric Power Corporation (EEPCo) [State-owned Company]

Implementing agencies [Type]

CGC Overseas Construction Co., Ltd. (CGCOC) [State-owned Company]

Hydrochina-CGCOC JV [State-owned Company]

Hydrochina Corporation Limited [State-owned Company]

Sany Heavy Industry Co., Ltd. [Private Sector]

Loan Details

Maturity

20 years

Interest rate

2.0%

Grace period

8 years

Grant element (OECD Grant-Equiv)

53.0275%

Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit