Bank of China and Deutsche Bank (China) provide $298.9 million syndicated loan for the Cañar and Naranjal Flood Control Project

On July 24, 2013, the Republic of Ecuador signed a $298,880,591.93 syndicated loan agreement [identification number: 0033039-0000070 BJ: 1749986.10] with Bank of China Limited and Deutsche Bank (China) Co., Ltd. for the Cañar and Naranjal Flood Control Project. This oil-backed loan carried the following borrowing terms: a variable interest rate of 6 month LIBOR plus a 3.50% margin, a 3% default (penalty) interest rate, a 4 year grace period, a 14 year year maturity, a 0.75% commitment fee, and a 1% management fee. The borrower was expected to use the proceeds of the loan to partially finance two commercial contracts (no. 2012-061 and 2012-062) worth $351,624,225.80 between China International Water & Electric Corporation and Secretaria Nacional del Agua (Senagua), which were signed on August 8, 2012 and August 9, 2012. The loan’s (principal) outstanding amount was $179,328,355.13 as of December 31, 2021 and $149,440,295.93 as of November 30, 2022. The purpose of the Cañar and Naranjal Flood Control Project was to set fluvial defenses along the Cañar river, and thereby protect some 37,000 hectares and 176 km along the river and its effluents, as well as Patul, Piedras, Norcay rivers and the Trobador streams. With a total of 10 gates, the project sought to regulate up to 1,500 m3/s of water coming from the overflows of the river, to a 23 km long bypass which will have a deposit in La Lagartera lakes, which was designed to store 14 million cubic meters of water for irrigation. The project was carried out by China International Water & Electric Corporation (CWE). It was originally scheduled for completion in August 2015. However, the $393.8 million contract with CWE did not become effective until 2015. Construction began on April 21, 2015. Project activities included the construction of a diversion dam; the construction of a 23 km long canal; the construction of 2 bridges; and the rehabilitation of 4 bridges. The project fed river water to eight giant Chinese turbines designed to produce enough electricity to power more than a third of Ecuador. The project was completed and handed over to the authorities on January 12, 2016.

Additional details

1. The Chinese project title is ‘厄瓜多尔可尼尔防洪工程项目是公司在厄’ or '可尼尔防洪项目' . The Spanish project title is Construcción del Sistema de Control de Inundaciones Naranjal and Construcción del Sistema de Control de Inundaciones Cañar. 2. AidData has estimated the all-in interest rate (3.909%) by adding 3.5% to average 6-month LIBOR in July 2013 (0.409%). 3. The Ecuadorian Ministry of Finance loan identification number is 28082000. 4. The loan agreement can be accessed in its entirety via https://www.documentcloud.org/documents/20488202-ecu_2013_446

Number of official sources

16

Number of total sources

25