Narrative
Full Description
Project narrative
On December 30, 2010, China Eximbank signed a $235.2 million buyer’s credit loan agreement with Ethiopian Shipping Lines S.C (ESL or 俄比亚船运与物流公司举) for the construction of nine shipping vessels. The face value of the loan was later downwardly revised to $234,766,400. The loan, which was backed by a sovereign guarantee and a Sinosure credit insurance policy, carried the following borrowing terms: an interest rate of 3.067%, a grace period of 3.065 years, and maturity of 10.565 years. The loan's first and last scheduled principal payment dates were January 21, 2014 and July 21, 2021, respectively. Its first and last scheduled interest payment dates were January 21, 2012 and January 21, 2022, respectively. The borrower was expected to use the proceeds of the loan to finance 80% of the cost of a $294 million commercial contract between ESL and China Poly Group Corporation (中国保利集团有限公司), which was signed in 2010. According to the Government of Ethiopia’s Aid Management Platform (AMP), the $235.2 million (ETB 3,216,027,397) loan achieved a 28% disbursement rate, with China Eximbank making 3 loan disbursements (worth ETB 938,738,101) between 2011 and 2012: an ETB 172,782.818 disbursement on October 10, 2011, an ETB 117,749.135 disbursement on January 9, 2012, and an ETB 648,206,148 disbursement on October 10, 2012. Of the nine vessels that the ESL purchased, seven were to be multi-purpose freighters and two to be oil tankers. The vessels, which were produced by Shandong Huanghai Shipbuilding and delivered by China Poly Group Corporation, were ordered by ESL around January 2011 and they were officially handed over to the Ethiopian Shipping and Logistics Service Enterprise (ESLESE) on May 17, 2014. ESLESE initially operated these nine vessels. However, according to the United Nations Conference on Trade and Development, the nine vessels are now being leased by a company other than ESLESE.
Staff comments
1. The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143122101160. 2. The AMP identifies the face value of the loan as ETB 3,216,027,397. 1 Ethiopian Birr (ETB) was equal to 0.06 United States Dollars (USD) in September 2010, which implies that the USD face value of the loan was $192,961,643.82. 3. The Chinese project title is 9艘货船. 4. For the time being, AidData assumes that this loan is backed by a sovereign guarantee because the Government of Ethiopia’s Ministry of Finance indicates in its Public Sector Debt Statistical Bulletin No. 15 that ‘government-guaranteed external debt comprises of loans and suppliers credits contracted by public enterprises, mainly the Ethiopian Electric Power (EEP), Ethiopian Electric Utility (EEU), Ethiopian Sugar Corporation, Ethiopian Railways Corporation, Ethiopian Shipping Lines and guaranteed by MoFED as well as the state owned bank — the Commercial Bank of Ethiopia (CBE).’ 5. China Poly Group Corporation is a state owned Chinese business group among 102 central state owned enterprises under the supervision of State-owned Assets Supervision and Administration Commission of the State Council. 6. ESLSE is a public-sector company that provides logistics shipping services (sea transport, agency services, stevedoring, and shore handling); clearing and freight forwarding by its MTS representation in Djibouti (customs clearance, port clearance, and road freight); and port and terminal services (receiving and delivering cargo, cargo loading and unloading, filling and emptying of containers, etc.). In 2011, Ethiopia decided to merge three organizations -- the former Ethiopian Shipping Lines S.C, Maritime and Transit Services Enterprise, and Dry Port Services Enterprise -- into a new company named the Ethiopian Shipping and Logistics Services Enterprise (ESLESE). 7. The loan identification number in the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS) is 20799000 and the corresponding project name in DMFAS is ‘PURCHASE OF 9 VESSELS(ESL)’. 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 8. According to the Public Sector Debt Statistical Bulletin No. 15 published by the Ethiopia's Ministry of Finance and Economic Development (https://www.dropbox.com/s/2owglpahph3n5hy/Public%20Sector%20Debt%20Statistical%20Bulletin%20No.%2015%20%282010.11%20-%202014.15%29.pdf?dl=0), the loan carried an interest rate 3.067%. However, according to the Government of Ethiopia's DMFAS, the loan carried an interest rate 2.94% (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). This discrepancy warrants further investigation.