China Eximbank provides $208 million preferential buyer’s credit for Southern Power Grid Reconstruction Project (Linked to Project ID#39619, #96098)

On June 2, 2011, China Eximbank and the Ministry of Finance of the Kyrgyz Republic signed a $208 million preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC No. (2011)18 TOTAL NO. (169)] for the Southern Power Grid Reconstruction Project. The Kyrgyz Parliament ratified the loan (PBC) agreement on June 13, 2011. The loan carried the following borrowing terms: a 20 year maturity, a 7 year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0.25% commitment fee, and a 0.25% management fee ($520,000). The final maturity date of the loan is September 21, 2031. On August 3, 2011, the State Agency for Budget Credit Management under the Ministry of Finance of the Government of the Kyrgyz Republic entered into a subsidiary loan agreement (on-lending arrangement) with National Electric Grid of Kyrgyzstan, OJSC (or Joint Stock Company “National Grid of Kyrgyzstan” or OJSC Natsionalnaya Elektricheskaya set Kyrgyzstana or OJSC NES of Kyrgyzstan or NEGK). The proceeds of the loan were to be used by the end-user (ultimate borrower) — National Electric Grid of Kyrgyzstan, OJSC — to finance 100% of the cost of its $208 million commercial contract (ID#166-69/0093) with Tebian Electric Apparatus Stock Co., Ltd. (TBEA), which was signed on October 15, 2009. According to the Government of the Kyrgyz Republic’s Aid Management Platform (AMP), the first loan disbursement (of $41,200,000) took place on December 21, 2011; the second loan disbursement (of $130,881,100) took place on December 31, 2012; the third loan disbursement (of $25,276,200) took place on December 31, 2013; and the fourth loan disbursement (of $183,030.90) took place on June 1, 2015. The same source notes that, as of 2015, the loan disbursement rate was 94.9% (with total loan disbursements amounting to $197,540,330.90). According to internal data that the Kyrgyz Ministry of Finance shared with AidData in July 2022, the loan had achieved a disbursement rate of 100% as of December 31, 2021 and its amount outstanding was $161,617,074.71 as of December 31, 2021. The Southern Power Grid Reconstruction Project involved the construction of a 500 kV Datka power station in Jalal-Abad (see Project ID#39619) and the construction of 220 kV power transmission lines in Batken, Jalal-Abad, and Osh stretching for 256.5 km. TBEA was the contractor responsible for project implementation. On August 30, 2011, construction commenced. The project was completed on June 20, 2013. However, the Southern Power Grid Reconstruction Project has underperformed from a revenue generation and debt repayment perspective. On December 9, 2019, a Settlement Agreement was signed by Joint Stock Company “National Grid of Kyrgyzstan” and the State Agency for Budget Credit Management under the Ministry of Finance of the Kyrgyz Republic. Under the terms of the Settlement Agreement, overdue repayments (arrears) were included in an updated repayment schedule (amortization table) without any change to the loan’s final maturity date. According to the audited financial statement of Joint Stock Company “National Grid of Kyrgyzstan” for the year that ended on December 31, 2019, ‘[t]his restructuring […] led to significant changes in the amortized cost of loans from the Export-Import Bank of China.’ Then, on or around July 1, 2021, China Eximbank and the Government of the Kyrgyz Republic signed a debt suspension agreement [No. DSSI2021PHASE2-029]. Under the terms of the agreement (captured via Project ID#96102), the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the preferential buyer's credit agreement for the Southern Power Grid Reconstruction Project. The original loan (PBC) that was issued on June 2, 2011 is captured via Project ID#40431. The December 2019 rescheduling is captured via Project ID#96098. The July 2021 rescheduling is captured via Project ID#96102.

Additional details

1. The Russian project title is проекта модернизации линий электропередачи на юге Кыргызстана. The Chinese project title is 南方电网改造项目. 2. The China Eximbank PBC (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/gazngit9wodhyby/China%20Eximbank%20PBC%20Agreement%20for%20the%20Southern%20Power%20Grid%20Reconstruction%20Project.doc?dl=0. 3. The 2021 debt suspension agreement [No. DSSI2021PHASE2-028] can be accessed in its entirety via https://www.dropbox.com/s/huwa695j3w9hwig/DSSI%20Agreement%20for%20Kyrgyz%20Republic.pdf?dl=0. 4. A detailed loan repayment reschedule (that the Kyrgyz Ministry of Finance shared with AidData in July 2022) can be accessed via https://www.dropbox.com/s/xg0cmomv0qk7cbj/Repayments.xlsx?dl=0. The schedule reflects actual repayments through December 31, 2021 and planned/scheduled repayments after December 31, 2021. Note also that (a) China Eximbank granted the Government of Kyrgyz Republic a a deferral of payments for the period from August 2021 to December 2021, and (b) the deferred principal and interest amounts are included in the main body of the debt and the repayment amounts of the deferrals (with additional accrued interest for granting a deferment) are already included in the repayment schedule. 5. More detailed locational information can be found within the source Проект «Модернизация линий электропередачи на юге Кыргызстана». 6. The Southern Power Grid Reconstruction Project is closely related to another China Eximbank-financed Datka-Kemin 500kv Transmission Line Construction Project (captured via Project ID#39619), which supported the construction of the 88 km, 500kv power transmission line from Datka to Kemin.

Number of official sources

19

Number of total sources

33