CDB contributes $231 million to syndicated buyer’s credit loan for EETC 500KV Transmission Lines Project (Linked to Project ID#53069 and #98763)

On January 21, 2016, the President of Egypt, Abdel Fattah El Sisi, and the President of China, Xi Jingping signed an Economic and Technical Cooperation Agreement (ETCA) in which the parties agreed to upgrade the capabilities of Egypt’s national 500kV backbone power grid. Then, on May 15, 2017, during a Belt and Road Forum in Beijing, the Egyptian Electricity Transmission Company (EETC) signed a $690,018,600 syndicated buyer’s credit loan agreement with three Chinese state-owned banks — the Export-Import Bank of China (China Eximbank), which served as the lead arranger, China Development Bank (CDB), and the Beijing Branch of Bank of China (BOC) — for the EETC 500KV Transmission Lines Project. China Development Bank contributed $231,000,000 to the loan syndicate (captured in Project ID#58351). China Eximbank and Bank of China contributed the remaining $459,018,600. AidData assumes that both members contributed equally ($229,509,300) (captured in Project ID#53069 and #98763). The loan carried a 15-year maturity. Its interest rate and grace period are unknown. Sinosure provided long-term buyer’s credit insurance to the borrower. Egypt’s Ministry of Finance also issued a sovereign guarantee in support of the loan in June 2017. The proceeds of the syndicated loan were to be used by the borrower to finance 85% of the total cost ($811,790,000) of an engineering, procurement and construction (EPC) contract that EETC signed with State Grid Corporation of China (SGCC) on January 21, 2016. EETC assumed responsibility for the remaining 15% through an advance payment to SGCC. This project involved the construction of 1,210 km of high voltage (500 kV double-circuit AC) overhead transmission lines in the northern, central and southern parts of the Nile River Delta region. The lines were mainly distributed in areas near gas-fired power stations in the eastern part of the Nile River Delta region. The project was implemented in two phases and divided into 15 segments (or ‘lots’). It was envisaged that the project would increase the supply of reliable power to the Nile River Delta region, promote upstream and downstream industries in Egypt, and create 7,000 new jobs. China Electric Power Equipment and Technology Co., Ltd. (CET) — a subsidiary of SGCC — was the general contractor responsible for the implementation. However, it hired several subcontractors, including China Energy Engineering Corporation (CEEC), Hubei Engineering Co., Ltd., and Power Construction Corporation of China (PowerChina). It also hired Jiangsu Zhongtian Technologies Software Technology Co., Ltd, a private Chinese company, for all line equipment and electric metal fittings. The project officially commenced on May 6, 2016. Then, on November 3, 2016, 3 transmission lines with a total length of 380 km (part of Phase 1) were successfully put into operation. In May 2017, the construction of an additional transmission line was completed. On September 4, 2017, an agreement on Phase 2 was signed during the BRICS summit. The same month witnessed the completion of a 94 km section that began in April 2016 and was undertaken by Hubei Engineering Co., Ltd. By the end of 2017, the borrower had drawn $115,000,000 from CDB’s contribution to the syndicated loan. However, the size of the borrower’s drawdowns from the Bank of China’s contribution and China Eximbank’s contribution are unknown. Another 80 km segment was completed on November 26, 2018. Two additional transmission lines — an 80 km line from Samanoud to Banha and a 94 km line from Borosus to Samanoud — were completed by Hubei Engineering Co., Ltd. in January 2019. As of mid-2019, the project had achieved a 96% completion rate. By the end of June 2019, another 194 km of lines were constructed and the project reached full completion.

Additional details

1. This project is also known as the EETC 500 KV Transmission Project, the Upgrade Project of EETC 500 kV National Backbone Grid, the Egyptian EETC 500 kV Backbone Network Upgrading and Transforming Transmission Project, and the 500 KV Electric Power Transmission Lines Project, and the EETC 500KV Transmission Lines Project (Phase I and Phase I). 2. The Chinese project title is 国家电网500千伏输电线路工程项目 and 埃及500kV输电线路项目. 3. In the database of Chinese loan commitments that SAIS-CARI published in July 2020 and the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, China Eximbank is identified as the only lender that financed this project. However, multiple official sources identify this project as being financed by three Chinese banks — China Development Bank, Bank of China, and China Eximbank — through a syndicated loan. 4. This project achieved financial close on October 10, 2017. However, it is not clear how the agreement that was signed on October 10, 2017 is different from the agreement that was signed on May 15, 2017. This issue merits further investigation. 5. At least one source (https://amritec.com/energy/) indicates that this project was financed according to an EPC+F model. This issue warrants further investigation. 6. The exact size of Bank of China and China Eximbank's respective financial contributions to the $459 million syndicated loan are unknown. For the time being, AidData assumes that both of the lending syndicate contributed equal amounts ($229,509,300).

Number of official sources

22

Number of total sources

30