China Eximbank provides $81.4 million loan for Bole-Lemi and Kilinto Industrial Zone Power Transmission Project

On December 12, 2017, China Eximbank and Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned power company — signed a $81,401,534.20 (ETB 1,819,025,346) commercial loan agreement for the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project. The borrowing terms of the loan are unknown. However, it is known that the Ethiopian Government issued a sovereign guarantee in support of the loan. The borrower was expected to use the proceeds of the loan to finance 83% of the cost of a $98 million commercial contract between EEPCo and TBEA Co., Ltd., which was signed in April 2016. According to the Government of Ethiopia’s AMP, the ETB 1,819,025,346 loan achieved a 68% disbursement rate, with China Eximbank making a single loan disbursement worth ETB 1,245,292,880 on September 9, 2019. The purpose of the project was to construct 28.4 km of 400 kV and 230 kV high voltage electricity transmission lines to the Bole and Kilinto Industrial Zones in Addis Ababa, construct a 230/33 kV Kilinto substation, construct a 230/33 kV Bole-Lemi Power substation, construct a 400/230/15 kV Koye Abbo substation, and expand an existing 400 kV Gelan substation. TBEA Co., Ltd. is the EPC contractor responsible for implementation. This project reportedly entered implementation and was nearing completion in 2009. Kilinto, Bole-Lemi, and Koye Abbo substation commissioning and testing activities began in December 2019. However, this project has encountered major implementation problems. In June 2020, an electricity transmission tower collapsed after burglars attempted to steal equipment from it, leaving 22 companies operating in Bole-Lemi Industrial Park without electricity. There are also indications that the China Eximbank loan for the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project has 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 Project ID#58616). Then, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects (including the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project) 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.

Additional details

1. One official source identifies the face value of the loan as $83 million. 2. Multiple sources identify the project as a commercial loan; therefore, AidData has coded the loan type as non-concessional for the time being. 3. This project is also known as the Bole-Lemi and Kilinto Industry Zone Power Transmission Project and the Akaki–Koye Abbo-Klinto-Bole-Lemi High Voltage Transmission Line and Substations Project. The Chinese project title is Bole Lemi和Kilinto两个工业园供电项目. 4. The AMP system identification number for the project is 87143436115038. The AMP identifies December 6, 2016 rather than December 12, 2017 as the loan commitment date. This issue warrants further investigation. 5. For the time being, AidData relies on the first loan disbursement date (September 9, 2019) as a proxy for the project implementation start date. This issue warrants further investigation. 6. Demisu (Demissu) Lemma, the Director of Chinese Cooperation at the Ethiopian Ministry of Finance, can be reached at demissulemma1958@gmail.com.

Number of official sources

6

Number of total sources

17