Narrative
Full Description
Project narrative
In August 2014, AVIC Engineering Corporation and Ethiopian Airlines signed a $65 million Engineering, Procurement, Construction (EPC) contract for the Skylight Hotel Construction Project. and China Eximbank and Ethiopian Airlines signed a RMB 264,062,500 ($42,250,000) buyer's credit loan agreement for the Skylight Hotel Construction Project on January 16, 2017. According to the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS), the borrowing terms of the loan included a 9.333-year maturity, a 3.331-year grace period, and a 5% interest rate. The loan's first and last scheduled principal payment dates were May 15, 2020 and May 15, 2026, respectively. Its first and last scheduled interest payment dates were May 15, 2020 and November 15, 2026, respectively. The borrower was expected to use the loan proceeds to finance approximately 65% of the cost of the $65 million commercial (EPC) contract that AVIC Engineering Corporation and Ethiopian Airlines signed in August 2014. The loan's (principal) amount outstanding was RMB 264,062,500 as of June 2017. The purpose of the project was to construct a five-star hotel (called the Skylight Hotel) that is adjacent to Bole International Airport of Addis Ababa. The hotel is situated on about 40,000 square meters. It has 373 guest rooms, three restaurants (including the biggest Chinese restaurant in Ethiopia at 900m2, and a 900m2 traditional Ethiopian restaurant), and three lounge bars. The Grand Ballroom is designed to host 2,000 guests at once, making it the largest ballroom in Ethiopia. The hotel offers five function rooms of varying capacity, fitness centre, outdoor heated swimming pool, mini golf & driving range, a 600m2 exhibition centre, boutique shop, ticket office, and other amenities. AVIC Engineering Corporation was the EPC contractor responsible for project implementation. Construction began in September 2015. By January 2017, the project had achieved a 40% completion rate. The hotel was officially inaugurated on January 27, 2019 and expected to generate over 400 jobs. Grand Skylight Hotels Management Company (GSHM), a wholly-owned subsidiary of the Aviation Industry Corporation of China (AVIC), is responsible for the management of the hotel.
Staff comments
1. This project is also known as the Ethiopian Airlines Hotel Project, the Ethiopian Hotel Project, and the Hotel Project. The Chinese project title is 埃塞俄比亚航空公司五星级酒店项目 or 埃航格兰云天酒店. 2. China Eximbank and AVIC Engineering Corporation apparently signed a $42,250,000 Engineering, Procurement, Construction and Financing (EPC+F) agreement for the Skylight Hotel Construction Project. Under most EPC+F contractual arrangements, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. This issue warrants further investigation. 3. This China Eximbank loan was not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor was it included it in the Chinese Loans to Africa (CLA) Database — that is maintained by Boston University's Global Development Policy Center — as of September 2024. 4. Grand Skylight Hotels Management Company (GSHM) is a wholly-owned subsidiary of AVIC with a registered capital of 298 million yuan. The company started its business in 1985 from Shenzhen Shanghai Hotel and has more than 30 years' experience in hotel planning, construction consultancy and operations management. On August 2, 2016, Grand Skylight Hotels Management and Ethiopian Airlines successfully signed a technical service contract for the Skylight Hotel Construction Project (Ethiopian Airlines Hotel Project). 5. Ethiopian Airlines is a wholly state-owned company. It is the is state-owned flag carrier of Ethiopia. 6. One official source (https://www.dropbox.com/scl/fi/5nwg72mj7unyc41tgsmh1/List-of-Ethiopia-China-Cooperation-Major-Projects-from-Ethiopia-s-Ministry-of-Finance-September-2024.xlsx?rlkey=v9vjryd8kmq0bzshgocuma6mb&dl=0) identifies the loan that supported the project as a government concessional loan (GCL). This issue warrants further investigation. 7. The loan's principal amount outstanding in June 2017 is identified via http://www.repository.smuc.edu.et/bitstream/123456789/4011/1/Final%20Draft%20%20Draft%20Thesis%20%28June%2020%29.pdf 8. The loan identification number in the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS) is 20967004 and the corresponding project name in DMFAS is ‘EAL-HOTEL PROJECT’. See https://www.dropbox.com/scl/fi/7nrczfanixvivmiyzqx3i/MOFED-Loan-Level-Data-on-Borrowing-Terms-and-Loan-Performance-September-2024_OTHER_PUBLIC.xlsx?rlkey=5sqhh9ii4t3x8cmz0jf6s7cod&dl=0 9. One source (http://www.repository.smuc.edu.et/bitstream/123456789/4011/1/Final%20Draft%20%20Draft%20Thesis%20%28June%2020%29.pdf) indicates that the loan carried a variable (floating) marker interest rate rather than a fixed (5%) interest rate. This issue warrants further investigation.