China Eximbank provides RMB 411 million government concessional loan for Meskel Square to Bole International Airport Road Upgrading Project

Project narrative

On March 9, 2011, China Eximbank and the Government of Ethiopia signed an RMB 411 million ($60 million) government concessional loan (GCL) agreement for the Meskel Square to Bole International Airport Road Upgrading Project. The GCL carried the following borrowing terms: a 2% interest rate, a 8.04 year grace period, and a 21.05 year maturity. The loan's first and last scheduled principal payment dates were March 21, 2019 and March 21, 2032, respectively. Its first and last scheduled interest payment dates were March 21, 2012 and March 21, 2032, respectively. The borrower was expected to use the proceeds of the loan to finance a commercial (EPC) contract between the Addis Ababa Roads Authority and China Communications Construction Co., Ltd. (CCCC), which was also signed in September 2011. According to the Government of Ethiopia’s Aid Management Platform (AMP), China Eximbank made 10 loan disbursements (worth ETB 1,009,677,735) between 2012 and 2017: an ETB 340,982,517 disbursement on April 8, 2012, an ETB 88,157,505 disbursement on October 10, 2012, an ETB 23,291,956 disbursement on January 8, 2013, an ETB 95,785,441 disbursement on January 8, 2014, an ETB 27,184,466 disbursement on April 8, 2014, an ETB 78,740,157 disbursement on July 8, 2014, an ETB 40,404,040 disbursement on January 8, 2015, an ETB 27,439,782 disbursement on January 7, 2016, an ETB 123,303,329 disbursement on July 7, 2016, and an ETB 108,086,501 disbursement on January 7, 2017. The purpose of the project was to upgrade a 4.3 km road — that is 40 meters in width — from Meskel Square to Bole Airport Road Project in Addis Ababa. It also involved the rehabilitation of three interchanges at Olompia, Wello Sefer, and Rowanda junctions (measuring 1.2 km in length). The project was undertaken ahead of the 50th anniversary of the African Union. CCCC was the EPC contractor responsible for project implementation. Construction began on January 6, 2012 and the upgraded road was completed in May 2013 and opened to traffic. An inauguration ceremony for the road project was held on June 16, 2013. An official project completion ceremony took place on July 6, 2014. There are some indications that the China Eximbank loan for the Meskel Square to Bole International Airport Road Upgrading 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 Record 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.