Narrative
Full Description
Project narrative
On May 30, 2011, Zambia Electricity Supply Corporation (ZESCO) Limited signed a $284,739,000 buyer’s credit facility with Industrial and Commercial Bank of China (ICBC) for the Pensulo-Msoro-Chipata West 330 kV and Pensulo-Kasama 330 kV Transmission Lines Project. This loan carries the following borrowing terms: a 16.5 year maturity, a 6.5 year grace period, and an interest rate of LIBOR plus 250 basis points. The borrower was expected to use the proceeds of the loan to partially finance a $330 million commercial contract between the ZESCO Limited and Tebian Electric Apparatus (TBEA), which was signed in October 2010. The loan’s amount outstanding was $272,000,000 as of December 31, 2015, $284,700,000 as of December 31, 2016, $284,700,000 as of December 31, 2017, $284,700,000 as of December 31, 2018, $227,790,000 as of December 31, 2019, and $213,550,00 as of December 31, 2020. The project involved the construction of 670 km of power transmission lines — namely, the Pensulo-Msoro-Chipata West 330 KV electricity transmission line and the Pensulo-Kasama 330 kV electricity transmission line. It also involved the construction three new 330kv sub-stations in Kasama, Msoro and Chipata west as well as upgrading existing sub-stations in the three areas. The purpose of the project was to deliver electricity to the Northern and Eastern provinces near the Tanzania border. Tebian Electric Apparatus (TBEA) was the contractor responsible for implementation. A groundbreaking ceremony took place on July 22, 2012 and the project was completed and officially commissioned on December 14, 2015. This project is part of larger project called the Zambia-Tanzania-Kenya (ZTK) Transmission Interconnector, which sought link the power grids of all three countries.
Staff comments
1. The Chinese project title is Pensulo-Kasama以及Pensulo-Msoro-Chipata West两条330kV的输变电成套工程项目 or 特变电工赞比亚输变电项目 or 新疆特变电工输变电项目 or 从中部省Pensulo至北方省Kasama 以及Pensulo至东方省Chipata的330千伏输变电线路 or 赞比亚项目Pensulo-Kasama 330kV线路(北部工程). 2a. In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI records this loan as having a maturity of 15 years and a grace period of 5 years. AidData records the maturity length of the loan as 16.5 years and the grace period as 6.5 years because the audited 2017 financial statements of ZESCO Limited (the borrower) specify that the maturity date of the loan is January 31, 2028 and that repayments are not scheduled to begin until January 31, 2018. 2b. The Government of Zambia recorded a different grace period (1.666 years) in its voluntary reporting to the World Bank's Debtor Reporting System (DRS). See https://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=0. This issue warrants further investigation. 3. AidData estimates the interest rate (2.631%) by calculating the average 6-month LIBOR rate in the month when the loan was originally contracted (0.414%) and adding a 2.5% margin. 4. One official source (https://www.zambialaws.com/Zambia2012Pdfsi/SI-2012-76.pdf) suggests that the loan commitment date may have been in 2012 rather than 2011. This issue warrants further investigation.