China Eximbank provides $74.4 million buyer's credit loan for Lots 1, 3, 4, and 5 of Addis Ababa–Djibouti Railway Power Supply Project (Linked to Record ID#30171)

Project narrative

On September 4, 2015, China Eximbank and the Ethiopian Electric Power Corporation (EEPCo) signed a buyer's credit (loan) agreement worth $74,485,833.44 for the Addis Ababa–Djibouti Railway Power Supply Project (Lots 1, 3, 4, and 5). According to Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS), the borrowing terms of the loan included a 17.015-year maturity, a 3.5-year grace period, and an 8.76% interest rate. The loan's first and last scheduled principal payment dates were March 4, 2019 and September 4, 2032, respectively. Its first and last scheduled interest payment dates were September 4, 2018 and September 4, 2032, respectively. The Government of Ethiopia issued a sovereign guarantee and Sinosure provided a credit insurance policy in support of the loan. The purpose of the project was to electrify several sections (Lot 1, 3, 4, and 5) of the Addis Ababa–Djibouti Railway. 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. Lot 4 involved the construction of a 108 km single-circuit transmission line, using twin-bundled conductors (180mm2). The scope of work for Lots 1 and 5 are unknown. China Electric Power Equipment and Technology Co. Ltd. (CET) was the general EPC contractor responsible for project implementation. Shanghai Electric Power T&D Engineering Co., Ltd. and Sichuan Electric Power Transmission and Transformation Construction Co., Ltd. were also involved (most likely as subcontractors) in implementation. The project was completed and put into operation in 2017. There are some indications that the China Eximbank loan for the Addis Ababa–Djibouti Railway Power Supply 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 Record 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.