Chinese Government provides RMB 360 million interest-free loan for Pushkin Square-Gotera Interchange Road Project (Linked to Project ID#100 and ID#91947)

On December 27, 2016, the Ethiopian House of Representatives ratified an RMB 360 million (ETB 623,366,177) interest-free loan agreement with the Chinese Government for the Pushkin Square-Gotera Interchange Road Project (via Proclamation no. 986/2017). The ratification proclamation entered into force on January 12, 2017. The interest-free loan was issued by the Agency for International Economic Cooperation within China's Ministry of Commerce (MOFCOM). The loan proceeds were drawn from Economic and Technical Cooperation Agreements (ECTAs) that the Chinese Government and the Ethiopian Government had previously signed on July 20, 2010, April 18, 2011, August 15, 2011, January 28, 2012, October 29, 2012, and May 24, 2013. The borrower was expected to use the proceeds of the loan to finance an RMB 308,526,277.10 commercial contract between Addis Ababa City Roads Authority and China First Highway Engineering Co., Ltd. According to the Government of Ethiopia’s Aid Management Platform (AMP), the ETB 623,366,177 loan achieved a 132% disbursement rate, with MOFCOM making 4 loan disbursements (worth ETB 825,594,492) between 2020 and 2021: an ETB 194,164,377 disbursement on June 9, 2020, an ETB 565,829,909 disbursement on March 24, 2021, an ETB 12,455,390 disbursement on August 17, 2021, and an ETB 53,144,816 disbursement on October 13, 2021. However, according to the AMP, MOFCOM ultimately decided to cancel RMB 310 million of the Government of Ethiopia’s loan repayment obligations (due to its debt sustainability problems). This act of debt forgiveness is captured via Project ID#91947. The project will involve the construction of a 3.8 km road with a width of 30-45 meters that stretches from Pushkin Square to Gotera Interchange in Nifas Silk Laphto District. It has three segments: a 2.3 km road from Pushkin Square to the Gotera Interchange section stretches to 2.3 km and two feeder roads — Mauritius Street and Tanzania Street — that measure 1.5 km in length. The project also includes a two-lane 320 meter tunnel, bus rapid transit (BRT), and two interchanges. Upon completion, it was envisaged that the project will reduce traffic congestion in Addis Ababa and ensure the smooth flow of vehicles coming from Kirkos, Gotera, Gofa, Sar Bet, Mexico and Keria. The Gotera-Pushkin Square interchange is being built to accommodate three planned BRT lines that all intersect there: the B2 (under construction with AFD financing), the B3 (under construction with Korean ExIm financing), and the B6 (under construction with Korean ExIm financing), as well as decently integrated facilities for non-motorized travel. China First Highway Engineering Co., Ltd., a subsidiary of CCCC, is the contractor responsible for project implementation. A consortium consisting of First Highway Consultant Co., Ltd and Xi'an Fangzhou Engineering Consulting Company Co. Ltd is responsible for project management. Best Consulting Engineers Private Limited Company is responsible for providing project consulting services. A groundbreaking ceremony for the project took place on October 1, 2019. Liu Yu, Economic and Commercial Counsellor at the Embassy of China, Takele Uma, Mayor of Addis Ababa, Ahmed Shide, Ethiopia’s Minister of Finance, and Tan Jian, Chinese Ambassador to Ethiopia, attended the ceremony. Then, in May 2020, the Deputy Mayor of Addis Ababa conducted a project site visit and announced that the project was expected to reach completion within a year (May 2021). The project ultimately reached completion on August 15, 2022. This project has faced local scrutiny and criticism due to the fact that it was reportedly the most expensive road project to ever be undertaken (in unit cost terms) in Ethiopia (at ETB 395 million per kilometer of road). According to an October 2021 report, ‘Chinese engineers do not appear to have played a significant role in the conceptual design of the interchange. The BRT facilities that have been incorporated into the design have largely been designed by the consultants to the [French Development Agency, AFD], with input from ITDP Africa, and the main role of the Chinese firm building the road was to follow the designs made by other consultants. Th[is] trajectory indicates significant improvement on the part of Chinese-financed urban road projects over the course of the decade, with considerable progress still to be made, but this improvement appears to result primarily from the increasing sophistication of the Ethiopian government authorities rather than from any push from the Chinese ECAs or Chinese companies’.

Additional details

1. Since loan terms for the interest-free loan are unavailable, AidData has set maturity period to 20 years by default and grace period to 10 years by default per China's Foreign Assistance White Paper (http://www.cidca.gov.cn/2018-08/06/c_129925064_3.htm) which states that the maturity period of interest-free loans is 20 years, with a drawdown period of 5 years, grace period of 5 years, and repayment over 10 years. AidData treats the drawdown period as providing 5 years of additional grace. 2. This project is also known as the Pushkin to Goterra Road Project and the Alexander Pushkin Square-Gotera Interchange Road Project. 3. The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143497127238. 4. 1 Ethiopian Birr (ETB) was equal to 0.50 RMB in July 2010 which implies that the loan commitment value recorded in the AMP (ETB 623,366,177) was equivalent to RMB 311,683,088.50 and the (total) loan disbursements value recorded in the AMP (ETB 825,594,492) was equivalent to RMB 412,797,246.

Number of official sources

4

Number of total sources

14