Project ID: 40

ICBC provides $825 million export credit facility for 600MW Morupule B Power Project

Commitment amount

$ 1075628194.0

Constant 2017 USD

Summary

Funding agency [Type]

Industrial and Commercial Bank of China (ICBC) [State-owned Commercial Bank]

Recipient

Botswana

Sector

Energy (Code: 230)

Flow type

Export Buyer's Credit

Concessional

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 year

2009

Implementation

2010

2010-02-19

Actual start

Completion

2014

2014-05-04

Actual

Geography

Description

On June 15, 2009, the Industrial and Commercial Bank of China (ICBC) and Botswana Power Corporation (BPC) — a state-owned power company in Botswana — signed a $825,048,559.40 export credit facility agreement for the 600MW Morupule B Power Project (博茨瓦纳莫鲁卜勒B燃煤电站项目). This loan carries a 20 years of maturity, 3.5 years of grace period, and an interest rate of 6-month LIBOR plus a 1.6% margin. The period of repayment is from 2009 to 2029. Sinsoure and World Bank insured the loan and the Government of Botswana’s Ministry of Finance also provided a sovereign guarantee. The total cost of the Morupule B Power Project was $1.6623 billion. It was financed according to a 70:30 debt-to-equity ratio. ICBC contributed $825 million of debt financing, while the World Bank, and the African Development Bank contributed $136.4 million and $202.5 million of debt financing, respective. The 30% equity contribution ($498.4 million) came from Botswana Power Corporation/The Government of Botswana. This project involved the construction of a 600MW coal-fired power plant consisting of 4x150MW units — that use circulating fluidized bed technology — for domestic power generation purpose. The coal is sourced from the Morupule coal mine, which is the only major operating coal mine in Botswana. The Morupule coal mine is operated by Morupule Colliery Limited, a subsidiary of Debswana Diamond Company. Morupule B Power Station is located near the town of Palapye. It is geographically adjacent to the existing Morupule A Power Station. China National Electric Equipment Corporation (CNEEC) was the contractor responsible for implementation. A groundbreaking ceremony took place on February 19, 2010. It was originally envisaged that the power plant plant would be operational by October 2012. However, the project experienced significant delays and CNEEC did not hand over the four power generation units to the BPC until May 4, 2014. Then, in October 2014, three of the four units broke down, and the Government of Botswana had needed to consider importing energy from South Africa. The power plant was originally expected to operate at the annual capacity factor of about 80 percent, with annual gross generation of about 4,200 gigawatt-hour (GWh). However, the plant’s capacity factor was closer to 50 percent, reflecting poor availability and unreliability of the units due to forced outages. Units 1-4 had the capacity to produce 600MW, but they only operated at 21 percent capacity producing only 130MW. According to BPC's 2019 Annual Report, BPC has signed a Defects Remediation Agreement with CNEEC to remedy the plant's defects, which will result in the remediation of all plant’s defects in a phased manner between 2019 and January 2023. Efforts are also underway to expand the plant’s power generation capacity to 900MW has after a tender for construction of two additional units (Unit 5 and 6) was awarded to a joint venture between Japanese Marubeni and South Korea’s Posco Energy.

Additional details

This project is also known as 4x150 MW Morupule B Power Station Expansion Project or the 600MW Morupule B Coal Power Station Project. The Chinese project title is 博茨瓦纳莫鲁卜勒B燃煤电站项目 or 博Morupule电站建设项目. The loan details can be accessed in the database of Chinese loan commitments that SAIS-CARI released in July 2020, it does not record the interest rate for this loan. AidData records the interest rate (6-month LIBOR plus a 1.6% margin) that is reported by the borrower (Botswana Power Corporation) and the Government of Botswana. The effective interest rate that applies to this loan (2.78%) was calculated by taking the average 6-month LIBOR rate during the month (June 2009) when the loan agreement was finalized (1.18%) and adding a 1.6% margin.

Number of official sources

22

Number of unofficial sources

12

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Details

Cofinanced

Yes

Cofinancing agencies [Type]

African Development Bank (AfDB) (ADB) (BAD) [Intergovernmental Organization]; World Bank [Intergovernmental Organization]

Receiving agencies [Type]

Botswana Power Corporation [State-owned Company]; Government of Botswana [Government Agency]

Implementing agencies [Type]

Botswana Power Corporation [State-owned Company]; China National Electric Engineering Co., Ltd. (CNEEC) [State-owned Company]; Shenyang Boiler Works [Private Sector]

Accountable agencies [Type]

Loan type

Concessional

Maturity

20 years

Interest rate

2.78%

Grace period

4 years

Grant element

45.547493200000005%

Gurarantee provided

Yes

Insurance provided

Yes