ICBC provides $35.25 million loan for Musonda Falls Hydroelectric Power Plant Upgrading Project (Linked to Project ID#57565, #66848)

On January 26, 2017, the Industrial and Commercial Bank of China (ICBC) signed a $35.25 million loan facility agreement with ZESCO Limited — Zambia’s state-owned power company — for the Musonda Falls Hydroelectric Power Plant Upgrading Project. The loan carries the following terms: 15-year maturity, 3-year grace period, 4.69% interest rate (LIBOR plus 335 basis points) per annum. As of December 31, 2017, the loan's amount outstanding was $29.9 million. The Musonda Falls Hydroelectric Power Plant is located in Musonda Falls within Mwense District and Luapula Province. It is a source of power supply to seven districts in the province—namely, Chiengi, Kawambwa, Mwense, Chipili, Chembe, Nchelenge and Samfya. The purpose of this project was to upgrade the Musonda Falls Hydroelectric Power Plant from 5MW to 10MW. This increase in local power capacity also added to the national grid capacity, thereby supporting the fishing industry, farming activities and potential mining activities in nearby communities. In 2015, Sinohydro won the 18-month contract for project implementation. Sinohydro had previously provided two bridging loans in 2015 (as captured via Project ID#57565) and 2016 (as captured via Project ID#66848) for the same project. As of 2017, this project had achieved a 99% completion rate. Turbine-Generator Units 6 and 7 had completed their commissioning tests and reliability runs, but commissioning tests and reliability runs for Turbine-Generator Units 1 to 5 were still ongoing by the end of 2017. The scheduled project handover date of November 18, 2017 was not achieved. However, a 2018 Energy Sector Report published by Zambia’s Energy Regulation Board (ERG) indicates that ‘[t]he increase in [power] generation in 2018 is attributed to the [upgrading] of Musonda Falls Power Station’, which suggests that this hydroelectric power plant project was completed and put into operation in 2018.

Additional details

1. The Chinese project title is 穆松达水电站7台机组 共10MW. 2. The all-in interest rate was calculated as follows: 1.34% (Average 6-month USD LIBOR from Jan. 2017) + 3.35% (335 basis points) = 4.69% 3. In the SAIS-CARI China Loans to Africa database released in July 2020, this loan has an 18-year maturity length. However, AidData records the maturity length as 15 years because the audited 2017 financial statements of ZESCO Limited (the borrower) note that “[t]he loan shall be repaid over a 15 year period including a grace period of 3 years” (see source ID 67341 p. 40). 4. The Daily Mail (source ID 89004) provided the following exact transaction amount US$34,719,389. However, AidData relies on the audited 2017 financial statements of ZESCO since it is a more official source.

Number of official sources

6

Number of total sources

8