Project ID: 33244

China Eximbank provides $300 million preferential buyer’s credit for Phase I of Puttalam/Norochcholai Coal Power Project (Linked to Project ID#33463 and #33452)

Commitment amount

$ 651070004.8842448

Adjusted commitment amount

$ 651070004.88

Constant 2021 USD

Summary

Funding agency [Type]

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

Recipient

Sri Lanka

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

2005-08-30

Actual start

2007-07-23

Actual complete

2011-03-22

Geography

Description

On August 30, 2005, China Eximbank signed a $300 million preferential buyer’s credit (PBC) agreement with the Ministry of Finance of the Government of Sri Lanka for the Phase I of Puttalam/Norochcholai Coal Power Project. The PBC (captured via Project ID#33244) carries a 20 year maturity, a 5 year grace period, and an interest rate of 2%. It had disbursed $142,821,238.39 as of December 31, 2007 (Rs. 15,792,886,899) and $168,963,610.51 as of December 31, 2008 (Rs. 18,303,490,000). The borrower made repayments worth $19,978,236.69 in 2014 (Rs. 2,608,894,000). The PBC’s amount outstanding was $270,343,633.50 (Rs. 35,303,310,000) as of December 31, 2013, $210,000,000 as of December 31, 2016, and $100,000,000 as of June 30, 2022. On September 8, 2006, China Eximbank signed a $152,982,428 buyer’s credit loan (BCL) with the Ministry of Finance of the Government of Sri Lanka for Phase I of the Puttalam/Norochcholai Coal Power Project. The BCL (captured via Project ID#33463) carries a 15 year maturity, a 5 year grace period, and a 6% interest rate. The BCL’s amount outstanding was $3,960,517.11 (Rs. 517,191,257) as of December 31, 2013, $130,035,063 as of December 31, 2016, and $45,894,728 as of June 30, 2022. The Ministry of Finance of the Government of Sri Lanka then used the proceeds from the BCL and PBC to on-lend to Ceylon Electricity Board (CEB), which is a state-owned electricity company that controls all major functions of electricity generation, transmission, distribution and retailing in Sri Lanka. This project involved the installation of a 300MW coal power plant, a jetty for coal handling, and transmission lines from Norochcholai to Veyangoda and substation at Veyangoda. China Machinery Engineering Corporation (CMEC) was the contractor responsible for project implementation. A project inauguration ceremony took place on May 11, 2006. Phase I construction began on July 23, 2007. The first 300-megawatt phase was completed and ceremonially commissioned by President Mahinda Rajapaksa on March 22, 2011. However, there are indications that project has encountered debt repayment problems. In 2021, CEB disclosed that the Sri Lankan Treasury had ‘take[n] over [its] repayment obligation[s] due to non-availability of appropriate income based on the tariff approved by [Public Utilities Commission of Sri Lanka].’ Then, on April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions. Its decision to suspend external debt service reportedly affected all China Eximbank loans with amounts outstanding at the time of the announcement.

Additional details

1. For information on Phase II of the Puttalam/Norochcholai Coal Power Project, see Project ID#33452. 2. The Chinese project title is 普特拉姆燃煤电站. 3. This Puttalam/Norochcholai power plant is sometimes referred to as the Lakvijaya power plant. 4. The Government of Sri Lanka loan key number is 2005045.

Number of official sources

49

Number of total sources

69

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Details

Cofinanced

No

Direct receiving agencies [Type]

Sri Lanka Ministry of Finance [Government Agency]

Indirect receiving agencies [Type]

Ceylon Electricity Board [State-owned Company]

Implementing agencies [Type]

China Machinery Engineering Corporation (CMEC) [State-owned Company]

Ceylon Electricity Board [State-owned Company]

Government of Sri Lanka [Government Agency]

Sri Lanka Ministry of Finance [Government Agency]

Loan Details

Maturity

20 years

Interest rate

2.0%

Grace period

5 years

Grant element (OECD Grant-Equiv)

39.0747%

Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit