China Eximbank provides $48.31 million preferential buyer’s credit for 52MW Baluchaung 3 Hydropower Plant Project (Linked to Project ID#98029, 96221)

On May 27, 2011, China Eximbank and the Central Bank of Myanmar signed a $48.31 million preferential buyer's credit (PBC) agreement for the 52MW Baluchaung 3 Hydropower Plant Project. The borrowing terms of the PBC are unknown. However, it is known that the proceeds of the PBC were to be used by the borrower to partially finance an EPC contact between Union Resources and Engineering Co., Ltd (UREC) and Myanmar’s Ministry of Electric Power, which was signed on January 28, 2011. The purpose of the project was to construct a 52MW hydroelectric power plant [Baluchaung No.(3) HPP (BLC-3] — with two, 26MW power generation units (Unit 1 and Unit 2) — on the Baluchaung River in Kayah State. The project is located on the right bank of the lower Baluchaung River, its upstream end being located immediately downstream of, and connecting to, the tailrace area of the existing Baluchaung No.(2) Power Station (BLC-2), with the No.(3) Power Station being located some 5.25 km further downstream near the confluence of the Baluchaung River and the Nam Pawn River. The 52MW Baluchaung 3 Hydropower Plant discharges into the Nam Pawn River a short distance downstream of the confluence with the Baluchaung River. Baluchaung I-III operate practically on the same river flow since water discharged from the Baluchaung I turbines directly enters the Baluchaung II headrace with virtually no intermediate catchment inflow, and Baluchaung II directly discharges water into the Baluchaung III headrace. The power plants are therefore in practice operated as one. When the central power dispatcher instructs to increase or decrease power from the Baluchaung system, all three power plants need to adjust their operation proportionally. The cascade utilizes a combined elevation difference of 650 m and generates on average about 1,724 GWh/year, transmitted through two 220 kV transmission lines to Yangon and Swemyo respectively, a 132 kV transmission line to Mandalay, and a 33 kV distribution line to Loikaw and the surrounding area. UREC was the EPC contractor responsible for the implementation of the 52MW (2x26MW) Baluchaung 3 Hydropower Plant Project. The rotor of Unit 1 was successfully hoisted on September 21, 2013. Unit 1 successfully completed a 72-hour trial operation on January 3, 2014. Units 1 and 2 went into commercial operation in January 2014. A project completion ceremony took place on August 22, 2015. There are some indications that the China Eximbank loan for the 52MW Baluchaung 3 Hydropower Plant Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Myanmar signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Project ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Project ID#96221).

Additional details

1. This project is also known as the 2x26MW Baluchaung III Hydropower Plant Project, the 52 MW Beluchaung-3 Hydropower Plant Project, the Supply of Hydraulic Steel Structure and Electromechanical Works for the 52 MW Baluchaung (3) Hydropower Plant Project, the 52MW Baluchaung (3) Hydropower Plant Project, and the BLC-3 HPP Project. The Chinese project title is 布鲁桥三级水电站 or 缅甸布鲁桥（Baluchaung）3电站. The Burmese project title is ဘီလူးချောင်း(၃) ရေအားလျှပ်စစ်စီမံကိန်းမှာ. 2. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. 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 Myanmar was 15.0477 years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the 52MW Baluchaung 3 Hydropower Plant Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 4. 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 Myanmar was 5.7977 years in 2011. AidData estimates the grace period of the China Eximbank loan that supported the 52MW Baluchaung 3 Hydropower Plant Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. 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 Myanmar was 4.6293% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported the 52MW Baluchaung 3 Hydropower Plant Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0

Number of official sources

10

Number of total sources

16