China Eximbank provides $500 million preferential buyer's credit for 275MW Soubré Hydroelectric Dam Construction Project (Linked to Record ID#66198)

Project narrative

On January 4, 2013, China Eximbank and the Government of Cote d'Ivoire signed a preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC 2012 NO. (48) TOTAL NO. (236)] worth $500 million (CFA 250 billion) for the 275MW Soubré Hydroelectric Dam Construction Project. The PBC carries the following borrowing terms: a 2% interest rate, a 20-year maturity, and a 9-year grace period. This agreement was ratified by the Government of Cote d'Ivoire on March 18, 2013 (Decree n ° 2013-178). The proceeds of the loan were to be used to finance approximately 85% of the cost of a $572 million commercial (EPC) contract with Sinohydro Corporation Ltd., which was signed on April 28, 2009. According to the Government of Côte d'Ivoire’s Aid Management Platform (AMP), the China Eximbank loan had achieved a 93.1% disbursement rate (CFA 232,850,661,397.89 out of CFA 250,000,000,000) as of December 31, 2020. China Eximbank made 25 loan disbursements (worth CFA 232,850,661,397.89) between 2013 and 2020: a CFA 63,779,413,333.33 disbursement on September 24, 2013, a CFA 10,584,030,666.89 disbursement on April 3, 2014, a CFA 6,568,236,306.44 disbursement on June 10, 2014, a CFA 7,847,244,298.65 disbursement on June 27, 2014, a CFA 4,866,422,531.80 disbursement on September 28, 2014, a CFA 6,014,153,653.09 disbursement on October 30, 2014, a CFA 9,032,388,974.69 disbursement on November 28, 2014, a CFA 3,789,607,696 disbursement on March 31, 2015, a CFA 7,284,855,283 disbursement on June 30, 2015, a CFA 8,526,743,819 disbursement on August 31, 2015, a CFA 3,872,029,423 disbursement on March 31, 2016, a CFA 4,775,119,445 disbursement on June 30, 2016, a CFA 3,079,102,939 disbursement on August 31, 2016, a CFA 5,330,356,102 disbursement on November 30, 2016, a CFA 11,456,420,368 disbursement on December 31, 2016, a CFA 9,172,889,950 disbursement on June 30, 2017, a CFA 17,577,412,613 disbursement on August 31, 2017, a CFA 8,230,933,159 disbursement on November 30, 2017, a CFA 7,672,152,137 disbursement on January 31, 2018, a CFA 1,742,198,324 disbursement on April 30, 2018, a CFA 2,375,371,988 disbursement on May 31, 2018, a CFA 2,886,617,772 disbursement on January 31, 2019, a CFA 1,617,818,440 disbursement on April 30, 2019, a CFA 12,707,600,442 disbursement on October 31, 2019, and a CFA 12,061,541,733 disbursement on December 31, 2020. The project involved the construction of the 275MW Soubré dam and hydroelectric power plant located near Naoua Falls on the Sassandra River in the Nawa Region. The dam was to have a maximum height of 20 meters, a length of 4.5 kilometers, and a storage capacity of 83 million cubic meters. The project also involved the construction a 225 kV electricity transmission line from Soubré to Taabo, the construction a 225 kv transmission line from Taabo to Yopougon 2 (to serve the greater Abidjan area), and the expansion of the Soubré, Taabo and Yopougon substations. Sinohydro Corporation Ltd. was the general EPC contractor responsible for implementation. Sinohydro Bureau 5 Co., Ltd. also supported the implementation of the project. Sinohydro Corporation Ltd. hired Alstom to design, manufacture, supervise installation, commission, test, and provide other services for three 90 MW Francis turbine-generator sets, a 5 MW Bulb turbine generator, and other related equipment. Dam construction supervision services were provided by TRACTEBEL. The project was originally scheduled to last 56 months. Beginning in February 2013, the manufacturing of the turbines began in Tianjin, China. Construction began on September 24, 2013. The project achieved a 30% completion rate by October 2014, a 74% completion rate by March 2016, and a 100% completion rate by the end of March 2017. The transmission lines from Soubré to Taabo and Taabo to Yopougon 2 were officially inaugurated in June 2017. The project as a whole was officially completed and handed over to the Ivorian authorities on November 2, 2017. Upon completion, the project reportedly increased Cote d’Ivoire’s power generation capacity by nearly 14%. The project formed a leading group on compliance, appointed a chief compliance officer and compliance specialist, and formulated compliance regulations to improve the compliance management system. Clearly defined compliance duties were assigned to an array of departments, including supervision, audit, law, internal control, risk management, production safety, quality assurance, environmental protection, and marketing. A specific department was formed and dedicated personnel were assigned to study relevant laws and industrial codes. Regarding compliance risks related to subcontracting, marketing, procurement, and customs clearance that may occur during project implementation, Sinohydro Corporation Ltd. formulated and revised 88 relevant regulations and put in place a coordinated governance structure where each department performed clear-cut duties with effective checks and balances. Fund management procedures and regulations on non-productive outlays and reimbursements were developed to minimize the risk of corruption and wasteful spending. The approval of sub-contractors and subcontracts was strictly controlled for effective supervision over subcontracted projects. Compliance training was also strengthened for all overseas employees and steps were taken to make the management team more competent and more capable of predicting and fending off risks. However, the project encountered several implementation obstacles related to the resettlement and compensation of 3,000 people affected by the dam. The project was subjected to an ex ante environmental and social impact assessment (ESIA) and environmental management plan (EMP), but neither the ESIA nor the EMP were made publicly available. The EMP reportedly lacked a monitoring and evaluation system and a mechanism for reporting measures to reduce environmental impacts. Sinohydro Corporation Ltd. launched a QHSE Management System in 2010 and an HSE Management Guidance in late 2014. The QHSE Management System and HSE Management Guidance created procedures for noise management, waste management, dust control, air emissions control, hazardous waste management, water quality control, and contaminated land, erosion and sedimentation control procedures. A qualified third party performed an annual audit on compliance. The project's deputy director was made responsible for ensuring safety and environmental protection as well as the implementation of HSE measures. However, the EMP neither addressed sedimentation nor contained management or monitoring plans for erosion or sedimentation during construction and operation. There is also no evidence of a monitoring system being put in place for water quality or control over discharged water. Project managers for the Soubré Hydroelectric Dam report that Sinohydro Corporation Ltd. did take actions in order to reduce environmental impacts. These actions included reducing the reservoir area, building a spillway channel on the left bank (originally planned on the right bank) to protect aquatic animals, reducing disruption to the lives of local people in an effort to save funds, building a wastewater filtering processing system, using a sprinkler system to improve air quality, and recycling waste, oil and managing hazardous elements. However, measures in the EMP to address environmental impacts (noise, air and water quality, waste, sedimentation, and vegetation, erosion) were all temporary and there were no details on quantitative measurement of environmental impacts, effectiveness of the measures or plans for long-term management, monitoring or reporting. Société des Energies de Côte d’Ivoire (CI-ENERGIES) — a state-owned asset holding company that is responsible for managing assets in the electricity sector — now operates the Soubré hydroelectric power plant.