ICBC provides $29.6 million loan for Mpika Power Supply Improvement Project (Linked to Project ID#57492)

On July 13, 2016, Industrial and Commercial Bank of China (ICBC) and Zambia Electricity Supply Corporation (ZESCO) Limited — Zambia’s state-owned power company — signed a $29.6 million (seller's credit) facility agreement for the Mpika Power Supply Improvement Project. According to this agreement, ICBC was to disburse funds directly to TBEA Company Ltd., which would in turn use the loan proceeds to finance the implementation of the project. The loan carries the following borrowing terms: a 15-year maturity, a 3-year grace period, and an annual interest rate of LIBOR plus 335 basis points. As of December 31, 2017, the loan's amount outstanding was $5.8 million. As of December 31, 2019, the loan's amount outstanding was $27.71 million. The project sought to improve the supply of power in Mpika district within Muchinga Province by improving its (330-66 KV) electricity substation. TBEA Company Ltd. was the EPC contractor responsible for project implementation. Construction began in 2017 and the project had achieved an 85% completion rate (and 40% loan disbursement rate) by December 2018. The project was ultimately completed on March 15, 2019.

Additional details

1. This project is also known as the Improvement of Power in Mpika District Project and the Mpika Power Supply, 330-66 KV Substation Project. The Chinese project title is 赞比亚Mpika地区电力改善项目. 2. The SAIS-CARI Chinese Loans to Africa database released in July 2020 identifies this loan as having an 18-year maturity length. However, AidData relies on ZESCO sources (source ID#67341 and #88869), which identify a 15-year maturity. 3. The all-in interest-rate was calculated as follows: 0.999% (Average 6-month USD LIBOR from July 2016) + 3.35% (335 basis points) = 4.349%. 4. Even though Zambian official sources (ID#67341, #88869) portrayed this is as just an ordinary ICBC loan, TBEA (source ID#117086) confirmed that ICBC provided a seller's credit. 5. The monetary value of the EPC contract with TBEA was $38 million. 6. Official sources differ on the precise face value and commitment date of the loan. The Government of Zambia's Loans and Guarantees (Authorisation) (Exemption) Notice of 2017 identifies a $19.6 million ICBC loan that was issued on July 13, 2017 for the Mpika Power Supply Improvement Project (https://www.zambialaws.com/Zambia2017Pdfsi/SI%2049%20of%202017.pdf). ZESCO's 2019 Integrated Report identifies a $29.6 million ICBC loan that was issued on July 13, 2016 for the Mpika Power Supply Improvement Project (https://www.dropbox.com/s/9log3odahb3y8fa/ZESCOIntegratedReport2019-20210818131559.pdf?dl=0). This discrepancy warrants further investigation. 7. This project is part of phase II of a larger project called the Zambia-Tanzania-Kenya (ZTK) Transmission Interconnector Project, which will seeks to connect the power grids of all three countries (as captured via Project ID#57492).

Number of official sources

11

Number of total sources

14