Narrative
Full Description
Project narrative
On May 15, 2017, China Eximbank and the Government of Kenya signed an RMB 685,000,000 ($128,000,000) loan agreement for the Nairobi Underground Electric Power Distribution Network (Kileleshwa, Westlands, Parklands, Ngara, and Riverside Area) Project. The loan carried the following borrowing terms: a 2% interest rate, a 7 year grace period, and a 19.5 year maturity (final maturity date: September 21, 2036). The lender had not made any disbursements as of June 30, 2022. Nor had the borrower made any principal repayments as of June 30, 2022. The loan’s amount outstanding was zero as of June 30, 2021 and June 30, 2022. On October 31st, 2017, KPLC requested to change the scope of the project and was refused by the contractor. However, the actual cancellation of the loan was delayed for a further five years until January 12th, 2023. This resulted in Kenya having to pay RMB 9,856,388.75 in commitment fees and RMB 3,425,000 in miscellaneous charges. The project involves the installation of underground cables around the city in the Kileleshwa, Westlands, Parklands, Ngara and Riverside areas of Nairobi. More specifically, it involves (a) the establishment of a new 220/66kV substation at the city centre and construction of 16.5 kilometers of 220kV underground cable from Embakasi substation to the proposed City Centre substation, and (b) the construction of 25.71 kilometers of 66kV transmission lines in underground cable to connect the new City Centre substation to proposed Likoni Road substation, Nairobi West, Cathedral, City Square, Muthurwa and Parklands substations. The main contractor responsible for project implementation is the NARI Group Corporation.
Staff comments
1. This project is also known as distribution network renovation in 10 northern and western areas of Nairobi. The Chinese project title is 内罗毕配电网改造（北部城区）和内罗毕配电网改造（西部城区）项目. 2. Some sources suggest TBEA Corporation may have also been involved in the implementation of this project. This issue requires further investigation. 3. The other 5 areas of Nairobi supported by the China Eximbank-financed Nairobi Underground Electric Power Distribution Network Project (Kilimani, Hurlingham, Ngong Road, State House, and Lavington areas of Nairobi) are captured via Record ID#58693. 4. The project identification number in the Government of Kenya’s Electronic Project Monitoring Information System (eProMIS) is 2017/056986. The eProMIS reference identification number is TRANS0012017. eProMIS also refers to the face value of the loan as $120,366,400. 5. There are some indications that this project may have been financed through an Engineering, Procurement, Construction and Financing (EPC+F) arrangement. Under a typical EPC+F contractual arrangement, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. If this arrangement was in effect, it would imply that the loan was issued to NARI and backed by a repayment guarantee from the Government of Kenya (i.e. a sovereign guarantee). This issue warrants further investigation. 6. The loan identification number in the Government of Kenya’s external public debt register is 2017043_1. 7. The amounts outstanding, disbursements, and repayments data are drawn from the Kenyan Treasury’s External Public Debt Register. See https://www.dropbox.com/s/549ixt2gj1jbjvi/External-Public-Debt-Register-as-at-End-June-2022.pdf?dl=0 and https://www.dropbox.com/s/0et4jg1qfg1bo7r/External-Public-Debt-Register-as-at-End-June-2021.pdf?dl=0 and https://www.dropbox.com/s/233j706743q7f1g/External-Public-Debt-Register-as-at-End-June-2020.pdf?dl=0 and https://www.dropbox.com/s/qkoybr9ja0ohemy/External-Public-Debt-Register-as-at-End-June-2009.pdf?dl=0 and https://www.dropbox.com/s/thy3s6ggjcjd97z/External-Public-Debt-Register-as-at-End-June-2012.pdf?dl=0 and https://www.dropbox.com/s/fzbfq01vas6m0i9/External-Public-Debt-Register-as-at-End-June-2019.pdf?dl=0 and https://www.dropbox.com/s/ennrl6d4zd2nizs/External-Public-Debt-Register-as-at-End-June-2018.pdf?dl=0 and https://www.dropbox.com/s/8ibazrj1a8oho2d/External-Public-Debt-Register-as-at-End-June-2017.pdf?dl=0 and https://www.dropbox.com/s/wdbjl0wq49i09x1/External-Public-Debt-Register-as-at-End-June-2015.pdf?dl=0