China Eximbank provides $27.32 million buyer's credit loan for Addis Ababa–Djibouti Railway Power Supply Project Lot 3 (Linked to Project ID#30171, #59420, #91818, #91823, and #91824)

On September 6, 2015, the Shanghai Branch of China Eximbank and Ethiopian Electric Power Corporation (EEPCO) — an Ethiopian state-owned enterprise — signed a $27.32 million (ETB 391,202,783.30) buyer’s credit loan (BCL) agreement for the Addis Ababa–Djibouti Railway Lot 3 Power Supply Project (captured via Project ID#69083). The Government of Ethiopia issued a sovereign guarantee and Sinosure provided a credit insurance policy in support of the BCL. The borrowing terms of the BCL are unknown. Then, on November 30, 2015, the Shanghai Branch of China Eximbank and the Government of Djibouti’s Ministry of Finance signed a $24,400,000 (DJF 683 million) preferential buyer's credit (PBC) agreement to support the Addis Ababa-Djibouti Railway Power Supply Project Project Lot 2 (captured via Project ID#59420). Sinosure provided a credit insurance policy in support of the PBC. The borrowing terms of the PBC are unknown. However, it is known that the Government of Djibouti’s Ministry of Finance was expected to use the proceeds of the $24,400,000 PBC and EEPCO was expected to use the proceeds of the $27.32 million PBC to finance a $51.72 million (RMB 360 million) commercial (EPC) contract between Electricité de Djibouti and Shanghai Electric Power T&D Engineering Co., Ltd., which was signed on December 24, 2014. The commercial contract covered Lot 2 (within the borders of Djibouti) and Lot 3 (within the borders of Ethiopia) of the Addis Ababa–Djibouti Railway Power Supply Project. Lot 2 involved the electrification of the Addis Ababa-Djibouti Railway between the Ali-Sabieh, Holl-Holl and Nagad substations in Djibouti. It also supported a 63kV electricity transmission line from Nagad to Holl-Holl and Ali Sabieh (measuring 90 km in length). Lot 3 involved the construction of a new 10.6 km 230kV double-circuit double-bundle transmission line, the construction of three 230kV single-circuit double-bundle transmission lines (measuring 73.25 km in length), the construction of a new 132.21 km 230kV transmission line, and the expansion of an existing 230kV substation. Shanghai Electric Power T&D Engineering Co., Ltd. was the EPC contractor responsible for the implementation of Lot 2 and Lot 3. As of 2016, the project as a whole had achieved an 85% completion rate. The project eventually reached completion, but its precise completion date is unknown. There are some indications that the China Eximbank loan for the Addis Ababa–Djibouti Railway Power Supply Project Lot 3 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 Project 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.

Additional details

1. The Chinese project title is 埃塞俄比亚至吉布提铁路（简称“埃吉铁路”）的供电配套项目(第三标段) or 埃塞俄比亚-吉布提铁路电力输送变电站改造扩容项目. 2. The $27.32 million buyer's credit loan from China Eximbank is not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. These sources do record the China Eximbank PBC that the Government of Djibouti contracted for the Addis Ababa–Djibouti Railway Power Supply Project Lot 2. However, they identify the face value of the PBC as $20 million. The Djiboutian authorities have informed the IMF that the face value of the PBC is $24,400,000. 3. The system identification number for the Addis Ababa–Djibouti Railway Power Supply Project Lot 3 in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143436111872. 4. The AMP identifies the loan commitment date as September 1, 2014 and (USD) loan commitment value as $19,677,500. These issues warrant further investigation. 5. Lots 1, 2, 4, and 5 are captured via Project ID#91818, #59420, #91823, and #91824.

Number of official sources

10

Number of total sources

16