Narrative
Full Description
Project narrative
In 2016, China Eximbank agreed -- at least in principle -- to provide a loan worth approximately $588,795,000 to the Government of Tanzania for the 400kV North East Grid Project. The borrower was expected to use the proceeds of the loan to finance 85% of the cost of a $692.7 million commercial (EPC) contract between TANESCO and Tebian Electric Apparatus (TBEA or 特变电工), which was signed in June 2012. The Government of Tanzania was expected to cover the remaining 15% of the EPC contract cost. However, the Government of Tanzania subsequently disclosed a 2016 borrowing from China Eximbank with a face value of $32,368,469.60 and the following estimated borrowing terms: a 17.5-year maturity, a 5-year grace period, and a 2% interest rate. The project scope involved the construction of (a) a 682 kilometer long 400kV transmission line from Kinyerezi to Arusha via Chalinze and Segera; (b) the construction of 220kV transmission lines from Kibaha to Bagamoyo and from Segera to Tanga; and (c) the construction of power stations in Chalinze, Segera, Kange and Zinga. Northwest Electric Power Design Institute Co., Ltd. of China Power Engineering Consulting Group signed the final survey design contract on March 19, 2016. TBEA was the EPC contractor responsible for project implementation and there were some preliminary signs of implementation by TBEA in 2018. The transmission line was originally expected to be commissioned by 2021. However, as of August 2024, AidData had not identified any evidence of project completion.
Staff comments
1. This project is also known as the North East Power Transmission Lines Project, the North East Power Transmission Line 400kV Dar-Chalinze-Arusha Project, the Dar es Salaam-Arusha via Chalinze high voltage power transmission line project, and the 400kV North East Grid Dar-Chalinze-Tanga-Arusha Project. The Chinese project title is 坦桑尼亚东北电网 or 坦桑尼亚400千伏输变电线路东北电网 or 坦桑尼亚东北电网项目 or 东北电网项目 or 坦桑尼亚400千伏输变电线路项目 or 达累斯萨拉姆至阿鲁沙输变电线项目 or 达累斯萨拉姆-阿鲁沙输变电项目. 2. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Tanzania was 5 years in 2016. AidData estimates the grace period of the China Eximbank loan by using this figure. See https://www.dropbox.com/scl/fi/s7c2bgl6ybf4mnc10hcc1/Tanzania-s-Borrowings-and-Borrowing-Terms-from-Chinese-Creditors-IDS-August-2024-Export.xlsx?rlkey=0yy73c4iyn1m4lczn63jxsmcc&dl=0 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Tanzania was 2% in 2016. AidData estimates the interest rate of the China Eximbank loan by using this figure. See https://www.dropbox.com/scl/fi/s7c2bgl6ybf4mnc10hcc1/Tanzania-s-Borrowings-and-Borrowing-Terms-from-Chinese-Creditors-IDS-August-2024-Export.xlsx?rlkey=0yy73c4iyn1m4lczn63jxsmcc&dl=0 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Tanzania was 17.5 years in 2016. AidData estimates the maturity of the China Eximbank loan by using this figure. See https://www.dropbox.com/scl/fi/s7c2bgl6ybf4mnc10hcc1/Tanzania-s-Borrowings-and-Borrowing-Terms-from-Chinese-Creditors-IDS-August-2024-Export.xlsx?rlkey=0yy73c4iyn1m4lczn63jxsmcc&dl=0 5. In 2012, China Eximbank financed a natural gas pipeline project (as captured via Record ID#59733 and ID#59752) that would make Dar es Salaam the country's largest source of energy. The Government of Tanzania pursued the 400kV North East Grid Project in order to increase the capacity for distributing electricity from Dar es Salaam. 6. There is some circumstantial evidence that suggests the $32.3 million loan from China Eximbank in 2016 may have instead supported a police officer housing construction project. This issue merits further investigation. See https://allafrica.com/stories/201602020996.html and https://www.thecitizen.co.tz/tanzania/news/national/sh500-bn-loan-for-police-officers-houses-secured-house-told--2546386 and https://www.parliament.go.tz/polis/index.php/members/231/supp-answers