China Eximbank provides $295.9 million buyer’s credit loan for 254MW Genale Dawa III Hydroelectric Power Station Project (Linked to Project ID#52938)

On September 1, 2010, China Eximbank and the Ethiopian Electric Power Corporation (EEPCo) signed a $295,927,736 buyer’s credit loan (BCL) agreement for the Genale Dawa III Hydroelectric Power Station Project. The borrowing terms of the BCL were as follows: a 12 year maturity, a 3 year grace period, and a 2.43% interest rate. The Government of Ethiopia issued a sovereign guarantee in support of the loan. The borrower was expected to use the proceeds of the loan to partially finance a $451,058,001 commercial (EPC) contract [Contract N0.33.20/1/02)] between EEPCo and China Gezhouba Group Company (CGGC) which was signed on September 18, 2009 and modified on September 26, 2010. According to the Government of Ethiopia’s Aid Management Platform (AMP), the ETB 4,053,424,658 loan achieved a 111% disbursement rate, with China Eximbank making 15 loan disbursements (worth ETB 4,499,623,058) between 2014 and 2019: an ETB 234,280,303 disbursement on October 8, 2013, an ETB 158,812,261 disbursement on January 8, 2014, an ETB 194,174,757 disbursement on April 8, 2014, an ETB 1,200,000,000 disbursement on October 8, 2014, an ETB 404,040,404 disbursement on January 8, 2015, an ETB 265,556,593 disbursement on April 8, 2015, an ETB 102,387,246 disbursement on July 8, 2015, an ETB 405,453,493 disbursement on October 7, 2015, an ETB 153,171,320 disbursement on January 7, 2016, an ETB 244,603,535 disbursement on April 7, 2016, an ETB 145,293,164 disbursement on July 7, 2016, an ETB 27,576,322 disbursement on October 7, 2016, an ETB 522,418,088 disbursement on January 7, 2017, an ETB 45,062,662 disbursement on April 7, 2017, and an ETB 396,792,911 disbursement on March 27, 2019. The purpose of the project was to construct the 254MW Genale-Dawa III multipurpose hydropower plant. The plant consists of a concrete faced rock fill dam and an underground powerhouse. Based on the estimated sedimentation level, the project will have a lifetime of more than 1,000 years. The dam site is located in a low seismic hazard area of class I. The dam is 110m high, 456m wide and 450m long. It is made with groutable and non-erodible rock and has a volume of 3.2 million cubic metres (mm3). At the full capacity, the dam can store up to 2,570mm3 of water. It has a catchment area of 10,445km2 and a fill volume of 890,000m3. The dam spillway is an open chute type with an ogee weir crest and three radial spillway gates. The underground powerhouse is installed with three vertical Francis turbine generators with a capacity of 84.7MW each. It is housed within an underground cavern measuring 60m-long, 20m-wide and 41m deep and also includes auxiliary equipment. A 12.4km long, 8.1m diameter headrace tunnel carries water from the dam through a 188m deep steel-lined vertical shaft to a three-pronged manifold. The manifold feeds the water to the turbine inlet valves of the three turbines housed in the powerhouse. A 820m long tailrace tunnel and a 480m long open channel returns the water back to the river. A transformer cavern is located downstream of the powerhouse and includes three step-up transformers. The electricity generated is transferred from the transformers to a 230kV/400kV switchyard located above ground through a 500m long cable tunnel. The project area is located in Kobadi, some 400 km (air distance) south-east of Addis Ababa and some 200 km (air distance) north of the border with Kenya. The scheme, including the reservoir and power waterways, extends over a river corridor some 55 km long. The approximate centroid of the project area lies at latitude 5º 38' North and longitude 39º 43' East. CGGC was the EPC contractor responsible for implementation. However, several other contractors were involved in the project. Stantec, a US-based company, provided design, planning, management and consulting services. Lahmeyer International, a German company, conducted the feasibility study. Tunnelpro, an Italy-based supplier, provided tunnel boring machines. Project implementation commenced in March 2011 and the project was originally expected to commence on January 1, 2010 and reach completion within 48.5 months (January 15, 2014). However, the project encountered multiple implementation delays. An inauguration ceremony was held to commemorate the project’s completion on February 4, 2020. The project temporarily employed 390 Ethiopian workers. There are some indications that the China Eximbank loan for the 254MW Genale Dawa III Hydroelectric Power Station 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 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. This project is also known as the 254MW Genale-Dawa III Hydroelectric Power Station Project, the Geneale-Dawa-Multi Purpose Hydroelectric Project, and the GD-3 Project. The Chinese project title is 埃塞GD-3水电站工程. 2. A September 26, 2010 amendment to the EPC contract between Gezhouba Group Company Limited and Ethiopian Electric Power Corporation indicates that the borrower is responsible for 15% of the EPC contract (Ethiopian Electric Power Corporation), which implies that the lender (China Eximbank) may have been responsible for 85% of the EPC contract value ($383,399,300.85). However, for the time being, AidData relies on the face value of the loan ($295,927,736) that is reported by the Ethiopia Public Sector Debt Statistical Bulletin No.7. 3. The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143122101156. 4. 1 Ethiopian Birr (ETB) was equal to 0.060 United States Dollars (USD) in September 2010 which implies that the loan commitment value recorded in the AMP (ETB 4,053,424,658) was equivalent to USD 243,205,479.48. SAIS-CARI identifies the face value of the loan as $270 million, which is roughly equivalent to 60% of the cost of the 2010 commercial (EPC) contract between EEPCo and CGGC. 5. Ethiopia Public Sector Debt Statistical Bulletin No.7. identifies the loan commitment date as October 27, 2010. The AMP identifies the loan commitment date as September 1, 2010. This discrepancy warrants further investigation. 6. In 2009, the Government of Ethiopia and China Eximbank signed a $400 million general buyer’s credit loan agreement for multiple road and power projects, including the 254MW Genale Dawa III Hydroelectric Power Station Project. It appears that the September 1, 2010 BCL represents a subsidiary loan agreement. The September 18, 2009 EPC contract between EPPCo and CGGC can be accessed in its entirety via https://www.dropbox.com/s/3qd6jedombnt50o/EPC%20Contract%20for%20the%20Genale-Dawa%28GD3%29%20Multipurpose%20Hydropower%20Project.pdf?dl=0. 7. Project ID#69129 captures the China Eximbank loan for the construction of this power station. The transmission portion of the power station, funded by a different China Eximbank loan, is captured via Project ID#52938

Number of official sources

20

Number of total sources

33