Narrative
Full Description
Project narrative
On December 15, 2017, China Eximbank and ZESCO — a state-owned power company in Zambia — signed a $114,138,082.756 loan agreement for the 330kV Kabwe-Pensulo Second Transmission Line Project. The loan carries the following borrowing terms: a 15-year maturity, a 3-year grace period, and an interest rate of LIBOR plus a 3.2% margin. Principal and interest are to be repaid in 24 successive semi-annual installments. The loan’s outstanding amount was $7.64 million as of December 31, 2018, $7.64 million as of December 31, 2019, $7.6 million as of December 31, 2020, $7,639,261 as of June 30, 2021, and $7,639,261 as of June 30, 2022. The project involved the construction of a 300 km, 330 kV second transmission line to improve the security and reliability of the supply of electricity between the Pensulo substation and the town of Kabwe. The borrower was expected to use the proceeds of the loan to finance 85% of the cost of a $134,280,097.36 commercial contract between ZESCO and China Jiangxi Corporation for International Economic and Technical Cooperation (CJIC), which was signed on March 7, 2016 and amended on June 30. 2017. Construction began on November 21, 2019. The project had reportedly achieved a 70% completion rate as of October 8, 2020. The originally expected project implementation commencement and conclusion dates were March 15, 2019 and December 30, 2020, respectively.
Staff comments
1. This project is also known as 330kV Kabwe Stepdown-Pensulo Transmission Line Project and the Kabwe-Pensulo 330 kV Transmission Line II Project. The Chinese project title is 卡布韦至潘索罗330千伏输变电项目 or 赞比亚ZESCO输变电项目 or 330千伏输变电项目. 2. SAIS-CARI reported the loan to be committed in 2017, but ZESCO reports stated that the loan was still under negotiations in 2017. 3. The initial cost of the commercial contract was $120 million. It was signed with China Jiangxi International Economic and Technical Cooperation Corporation on March 7, 2016. A supplementary agreement of $14,378,537.31 was then signed for more engineering materials signed on June 30, 2017, raising the total contract value to $134,280,097.36. 4. AidData has estimated the all-in interest rate by adding 3.2% to average 6-month LIBOR in December 2017 (1.768%). 5. In 2018, China Jiangxi Corporation for International Economic and Technical Cooperation (CJIC) provided a $17 million bridge loan (supplier’s credit) to ZESCO — a state-owned power company in Zambia — for the 330kV Kabwe-Pensulo Second Transmission Line Project (captured via Record ID#88639). 6. One of the lawyers who advised on the transaction identifies the face value of the loan as $114,000,000. See https://www.dropbox.com/s/5xqey9jvmeo21jn/Project%20Financing.pdf?dl=0