China Eximbank provides $312.4 million buyer's credit loan for 275MW Minas-San Francisco Hydroelectric Power Plant Construction Project (Linked to Record ID#93434 and #96295)

Project narrative

On November 9, 2012, China Eximbank and the Government of the Republic of Ecuador signed a term sheet related to the financing of the 275MW Minas-San Francisco Hydroelectric Power Plant Construction Project. Then, on April 10, 2013, China Eximbank and the Government of the Republic of Ecuador signed a $312,480,966.99 buyer's credit loan (BCL) agreement (Contract No. 1410302052013210568) for the 275MW Minas-San Francisco Hydroelectric Power Plant Construction Project. The BCL carried the following borrowing terms: an annual interest rate of 6 month LIBOR plus a 4.2% margin, a grace period of 5.56 years, a maturity of 15 years, a 0.6% management fee ($1.874,885.80), a 0.6% commitment fee, and a 1.5% default (penalty) interest rate. It is backed by a credit insurance policy from Sinosure. The borrower was responsible for making 22 equal, semiannual principal payments (worth $14,203,680). The borrower was expected to use the proceeds of the loan to finance 66% of the cost of a commercial contract (payable in a $327,480,967 tranche and an RMB 944,239,050.56 tranche) between Corporación Eléctrica del Ecuador (CELEC E.P.) and Harbin Electric International Company Limited, which was signed on December 30, 2011. As of December 2018, the loan had achieved an 31.9% disbursement rate ($99,967,764.14 out of $312,480,967). The borrower made principal repayments worth $15,624,048.35 on September 21, 2018, $15,624,048.35 on March 21, 2019, $15,624,048.35 on September 21, 2019, $15,624,048.35 on March 21, 2020, and $19,229,597.97 on March 21, 2022. It did not make any principal repayments on the originally scheduled repayment dates of September 21, 2020, March 21, 2021, September 21, 2021, and September 21, 2022. The loan’s (principal) amount outstanding was $298,856,918.64 September 21, 2018, $281,232,870.29 as of March 21, 2019, $265,608,821.94 as of September 21, 2019, $249,984,773.59 as of March 21, 2020, $249,984,773.59 as of September 21, 2020, $249,984,773.59 as of March 21, 2021, $249,984,773.59 as of September 21, 2021, $249,984,773.59 as of December 31, 2021, $230,755,175.62 as of March 21, 2022, $230,755,175.62 as of September 21, 2022, and $230,755,175.62 as of November 30, 2022. The purpose of the project was to construct the 275MW Minas-San Francisco Hydroelectric Power Plant in the southwest province of Azuay and the cantons of El Oro, Pucará, Zaruma and Pasaje. Upon completion, the power plant was expected to have a maximum annual power generation capacity of 1.291 billion kWh and reduce carbon emissions by 690,000 tons each year. Minas San Francisco is made up of a 54-m-high rolled concrete gravity-type dam that generates a regulation and control reservoir, an intake work located on the right bank of the Jubones River that connects with a 13.9 km driving tunnel. The pressure pipe is developed in two sections that comprise a total drop of 474 meter. The underground powerhouse houses three Pelton-type turbines of 90 MW each. Harbin Electric International Company Limited was the general contractor responsible for implementation. Its work was overseen by Corporación Eléctrica del Ecuador (CELEC) and Ministerio de Electricidad y Energía Renovable (MEER). Construction began in March 2012. The excavation of a diversion tunnel was completed in August 2013. The diversion of the Jubones River took place in February 2014. Then, in January 2015, the excavation of the entrance window to the head tunnel was complete. The completion of the powerhouse excavation took place in October 2015. Then, in December 2016, the construction and assembly of the transmission line was completed. The power plant’s three generator rotors were lowered into place between January 2017 and May 2017. The filling of the reservoir occurred in December 2017. Then, in May 2018, the first rotation of the first turbine-generator took place. As of August 2018, the project had achieved a 99.7% completion rate. All three power generation units were connected to the grid on October 24, 2018. The first power generation unit was officially inaugurated on January 15, 2019. The project’s official handover ceremony took place on April 9, 2021. To date, the power plant has reportedly generated over 140 million kWh power, created more than 2,000 jobs, and delivered electricity on a daily basis to nearly 1.2 million people and 2,000 manufacturing companies. However, the project suffered multiple setbacks due to administrative and technical discrepancies with contractors and inspectors, as well as the COVID-19 pandemic. The China Eximbank loan (BCL) that supported this project also underperformed. It was rescheduled twice — once in September 2020 (as captured via Record ID#93434) and again in September 2022 (as captured via Record ID#96295).