China Eximbank provides $99.54 million preferential buyer's credit for Gibe III-Addis Ababa Power Transmission Lines Project (Linked to Record ID#59365 and ID#34447)

Project narrative

On March 23, 2011, China Eximbank and the Government of Ethiopia signed two preferential buyer's credit (PBC) agreements worth approximately $188,300,000 for the Gibe III-Addis Ababa Power Transmission Lines Project and the Gibe III-Addis Ababa Substations Project. The Ethiopian House of Representatives ratified the PBC agreements under Proclamation No. 717/2011 on June 16, 2011 and the proclamation entered into force on July 18, 2011. The $99,548,862.59 loan (PBC) for the Gibe III-Addis Ababa Power Transmission Lines Project, which is captured via Record ID#59363, carried the following borrowing terms: an interest rate of 2%, a grace period of 7.84 years, and a maturity of 20.849 years. The loan's first and last scheduled principal payment dates were January 21, 2019 and July 21, 2031, respectively. Its first and last scheduled interest payment dates were January 21, 2012 and January 21, 2032, respectively. The $88,407,218.54 loan (PBC) for the Gibe III-Addis Ababa Substations Project, which is captured via Record ID#59365, carried the following borrowing terms: an interest rate of 2%, a grace period of 7.84 years, and a maturity of 20.849 years. The loan's first and last scheduled principal payment dates were January 21, 2019 and July 21, 2031, respectively. Its first and last scheduled interest payment dates were January 21, 2012 and January 21, 2032, respectively. The proceeds of the China Eximbank loan (PBC) for the Gibe III-Addis Ababa Power Transmission Lines Project and the proceeds of the China Eximbank loan (PBC) for the Gibe III-Addis Ababa Substations Project were on-lent to Ethiopia Electric Power Corporation (EEPCO). According to the Government of Ethiopia’s Aid Management Platform (AMP), the $99.54 million (ETB 1,366,986,301) loan the the Gibe III-Addis Ababa Power Transmission Lines Project achieved a 117% disbursement rate, with China Eximbank making 6 loan disbursements (worth ETB 1,594,690,001) between 2012 and 2015: an ETB 345,236,851 disbursement on January 8, 2012, an ETB 494,548,393 disbursement on July 7, 2012, an ETB 547,277,798 disbursement on January 28, 2013, an ETB 86,931,818 disbursement on October 8, 2013, an ETB 19,685,039 disbursement on July 8, 2014 and an ETB 101,010,101 disbursement on January 8, 2015. According to the Government of Ethiopia’s AMP, China Eximbank made 8 loan disbursements (worth ETB 1,430,840,952) between 2012 and 2016 for the Gibe III-Addis Ababa Substations Project: an ETB 306,242,215 disbursement on January 8, 2012, an ETB 314,011,517 disbursement on January 8, 2013, an ETB 426,716,141 disbursement on April 8, 2013, an ETB 136,837,684 disbursement on July 7, 2013, an ETB 132,196,970 disbursement on October 8, 2013, an ETB 104,597,701 disbursement on January 8, 2014, an ETB 2,047,745 disbursement on July 7, 2015, and an ETB 8,190,980 disbursement on January 7, 2016. The purpose of the Gibe III-Addis Ababa Power Transmission Lines Project was to evacuate power from the ICBC-financed 1870MW Gilgel Gibe III hydroelectric dam (captured via Record ID#34447) to the capital city of Addis Ababa. It was designed and implemented in two ‘lots’. One of the lots involved the construction of a 293 km transmission line from Wolayta Sodo (also known as Sodo) to Sebeta via Akaki. The other lot involved the construction of a 50.3 km and 51 km double circuit transmission line from the Gibe III hydroelectric dam to the Wolayta Sodo distribution station. The Gibe III-Addis Ababa Substations Project involved the construction two new 400kv electricity distribution substations in Wolayta Sodo (Welata Sodo) and Akaki, and the expansion of an existing electricity distribution substations in Sebeta. TBEA Co. Ltd was the EPC contractor responsible for the implementation of Gibe III-Addis Ababa Power Transmission Lines Project. Shanghai Electric Group and Sinohydro were the EPC contractors responsible for the implementation of the Gibe III-Addis Ababa Substations Project. These projects were originally scheduled for completion by April 2013. However, they were ultimately completed in December 2015 and officially inaugurated on September 14, 2016. The projects reportedly brought increased power to the southern part of the country’s electricity grid and reduced local power shortages. There are some indications that the China Eximbank loan for the Gibe III-Addis Ababa Power Transmission Lines Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the Government of Ethiopia’s Aid Management Platform, as of September 2019, ICBC suspended about $67 million worth of loan disbursements 'due to [the] cross-default situation of the country’ (see Record ID#58616). Then, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects and halted project implementation due to Government of Ethiopia’s rapidly dwindling foreign exchange reserves and debt sustainability challenges. Demisu Lemma, the Director of Chinese Cooperation at the Ethiopian Ministry of Finance, noted at the time that the Ethiopian Government was in discussions with China Eximbank about a potential debt rescheduling (that would involved a 5-year maturity extension and a 1-year grace period extension). Then, after considerable delay, the G20 Common Framework (CF) creditor committee for Ethiopia convened in September 2021, with the French Government and the Chinese Government serving as co-chairs. The CF debt rescheduling talks were still ongoing in mid-2023.