China Eximbank provides $38.4 million buyer’s credit loan for Lot 3A Bahir Dar-Debre Markos 400kV Power Transmission Turnkey Project (Linked to Record ID#45047)

Project narrative

In November 2006, China Eximbank and the Government of Ethiopia’s Ministry of Finance and Economic Development signed a $500 million buyer’s credit facility agreement (互惠贷款) — also known as a master loan framework agreement and a master facility agreement — for an unspecified set of development projects. All subsidiary loans approved under the buyer’s credit facility agreement (captured via Record ID#45047) carried the following borrowing terms: a 13-year maturity, a 4-year grace period, and an interest rate of LIBOR plus a 2-3% margin. All of the subsidiary loans were secured with (i.e., collateralized against) Ethiopia's export receipts to China, which at the time primarily consisted of sesame seed export receipts. The buyer’s credit facility agreement also required that all Ethiopian exports (export receipts) to China to be overseen by the Commercial Bank of Ethiopia (CBE), the country’s largest state-owned financial institution. As a source of collateral, the borrower was required to maintain a minimum cash balance in a debt service reserve account (DSRA) at the CBE. The cash balance of the DSRA (escrow account) was $284,368,041 as of June 30, 2011, $308,914,767 as of June 30, 2012, $300,000,000 as of June 30, 2016, $300,000,000 as of June 30, 2017, $300,000,000 (ETB 8,260,410,000) as of June 30, 2018, $300,000,000 as of June 30, 2019, ETB 10,599,600,000 as of June 30, 2020, ETB 8,058,726,059 as of June 30, 2021, ETB 10,722,750,953 as of June 30, 2022, and ETB 9,832,603,839 as of June 30, 2023. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. According to the Government of Ethiopia’s Aid Management Platform (AMP), China Eximbank, CBE, and Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — signed a subsidiary buyer’s credit loan worth approximately ETB 335,934,342 ($38,464,879) for the Lot 3A Bahir Dar-Debre Markos 400kV Power Transmission Turnkey Project on March 4, 2008. The loan's first and last scheduled principal payment dates were December 31, 2011 and March 31, 2021, respectively. Its first and last scheduled interest payment dates were December 31, 2011 and March 31, 2021, respectively. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of a ETB 388,807,492.76 commercial contract between EEPCo) and Shanghai Electric Power Transmission and Distribution Engineering Co., Ltd., which was signed in August 2007. According to the Government of Ethiopia’s AMP, the ETB 335,934,342 ($38,464,879) loan achieved a 18% disbursement rate, with China Eximbank making a single loan disbursement (worth ETB 61,933,109) on March 31, 2010. The purpose of the project was to construct a 400 kV, 193.77 km power transmission line that connects Bahir Dar II substation to Debre Markos substation. Its precise implementation start date is unknown. However, as of September 2010, the project had achieved a 75% completion rate. The project was officially completed and inaugurated on March 19, 2011. It was originally scheduled to commence on October 17, 2007 and reach completion on April 17, 2010.