Narrative
Full Description
Project narrative
On May 15, 2017, China Eximbank and the Ministry of Finance of Kenya signed an RMB 1,200,000,000 ($210,896,000) loan agreement for the Nairobi Underground Electric Power Distribution Network (Kilimani, Hurlingham, Ngong Road, State House, and Lavington Areas) Project. The loan has a maturity length of 19.5 (final maturity date: September 21, 2036). The other borrowing terms of the loan are unknown. The proceeds of the loan were to be used by the borrower to finance a commercial contract between Kenya Power and Lighting Co. (KPLC) and China Shanghai (Group) Corporation for Foreign Economic & Technological Cooperation (SFECO), which was signed in February 2013. 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. The purpose of the project is to construct an underground electric power distribution network in the Kilimani, Hurlingham, Ngong Road, State House, and Lavington areas by, among other things, reinforcing underground high voltage lines. 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 20,299,999.88 in commitment fees and RMB 6,000,000 in miscellaneous charges.
Staff comments
1. This project is also known as the Nairobi 11kv Underground Power Distribution Network Project. 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. There are two sources (http://tjj.nanjing.gov.cn/tjxx/201802/t20180206_494659.html and http://www.hejiongj.com/knysc/14929.html) that suggest NARI Group Corporation may have also been involved in the implementation of this project. 3. This project is focused on the Kileleshwa, Westlands, Parklands, Ngara, and Riverside areas of Nairobi. Record ID#58661 captures a $128 million China Eximbank loan for underground cable upgrades in the Kileleshwa, Westlands, Parklands, Ngara, and Riverside Areas. 4. The project identification number in the Government of Kenya’s Electronic Project Monitoring Information System (eProMIS) is 2017/056987. The eProMIS reference identification number is TRANS0022017. eProMIS refers to the face value of the loan as $210,896,000. 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 SFECO 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 2017042_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