ICBC provides $85 million buyer's credit loan for Electrification of Northern, Eastern and Volta Regions Project (Phase 1)

On May 10, 2016, ICBC and the Government of Ghana signed an $85 million buyer's credit loan agreement for the Electrification of Northern, Eastern and Volta Regions Project, also known as the Supply and Erection of Electrical Materials and Equipment for the Electrification of 556 Communities in the Eastern, Volta, and Northern Regions Project. The ICBC loan reportedly carried the following borrowing terms: a 15.5 year maturity, a 5 year grace period, and an interest rate of 6-month LIBOR plus a 0.5% margin. The final maturity date of the loan is February 10, 2032. The contract cost for both Phase 1 and 2 was reported to be $180 million, with Phase 1 costing $92 million and Phase 2 costing $88 million. 85% of the contract cost was covered by a buyer's credit loan from ICBC. 15% of the contract cost was supposed to be covered by a loan from Standard Chartered Bank. Standard Chartered Bank eventually provided a $13,869,000 loan for this project. The $88 million contract for Phase 2 was signed on November 16, 2020 between Hunan Construction Group and Ghana's Ministry of Energy, although it is unclear how the contract will be financed. This project involves the design, manufacture, delivery, installation, completion and commission of an electrification project in 556 communities in the Eastern Region, Volta Region, and Northern Region. Hunan Construction Engineering Group Corporation is the contractor responsible for implementation. Construction began in 2018, but the project's precise implementation start date is unknown. There are some indications that the ICBC loan for the Electrification of Northern, Eastern and Volta Regions Project (Phase 1) may have financially underperformed vis-a-vis the original expectations of the lender. According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). There are some indications that the China Eximbank loan for Phase 1 of the Kpong Water Expansion Supply Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). Then, on December 19, 2022, the Government of Ghana announced a sovereign default, suspending debt service on its Eurobonds, its commercial loans, and most of its bilateral loans.

Additional details

1. The Government of Ghana also refers to this project as the Self-Help Electrification Programme in Five Regions HUNAN Project. The project is referred to as 加纳北部省、东部省、沃尔特省电网项目 in Chinese. 2. This project is distinct from the Rural Electrification Project contracted to CWE (as captured via Project ID#52991). 3. AidData has estimated the all-in interest rate (1.433%) by adding 0.5% to average 6-month LIBOR in May 2016 (0.933%).

Number of official sources

6

Number of total sources

8