China Eximbank provides $23.4 million buyer’s credit loan for FGG-2 230kV Finchaa-Ghedo-Gefersa Power Transmission Project (Linked to Project ID#45047)

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 Project ID#45047) carried the following borrowing terms: a 13-year maturity 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, the country’s largest state-owned financial institution. 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 and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth approximately ETB 213,216,749 ($23,453,842.39) for the FGG-2 230kV Finchaa-Ghedo-Gefersa Power Transmission Project on June 20, 2008. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 246,758,572.61 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China Gezhouba Group Company (CGGC), which was signed in August 2007. According to the Government of Ethiopia’s AMP, the ETB 213,216,749 loan achieved a 53% disbursement rate, with China Eximbank making 2 loan disbursements (worth ETB 112,441,086) between 2010 and 2012: an ETB 92,427,591 disbursement on March 31, 2010, and an ETB 20,013,495 disbursement on January 8, 2012. This project involved the construction of a 67 km, 230 kV transmission line from the Fincha’a-1 (Fincahaa-1) substation to the Ghedo substation, the construction of a 134 km, 230 kV transmission line from the Ghedo substation to the Gefersa substation, the construction of a 12 km, 230 kV transmission line from the Fincha'a-2 (Fincahaa-2) substation to branching point on the Fincha'a-I -Ghedo line, and the construction of a 29 km, 230 kV transmission line from the Neshe hydroelectric power plant (HEPP) to new Fincha'a-II substation. CGGC was the general EPC contractor responsible for project implementation. However, Anhui Electric Group Co., Ltd. was also involved in the project (most likely as a sub-contractor). This project was originally scheduled to commence on June 20, 2008 and reach completion on June 20, 2009. The power transmission line was ultimately put into operation in June 2011.

Additional details

1. AidData has estimated the all-in interest rate by adding 2.5% (the midpoint between a 2% and 3% margin) to the average 6-month LIBOR rate in June 2008 (3.104%). 2. This buyer's credit loan from China Eximbank is not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 3. The AMP system identification number for the FGG-2 230kV Finchaa-Ghedo-Gefersa Power Transmission Project is 8714327100841. 4. 1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 213,216,749 loan commitment recorded in the AMP was worth USD 23,453,842.39 at that time that it was contracted. 5. Some sources suggest that an ETB 135,000,061.80 commercial contract for the FGG-1 230kV Finchaa-Ghedo-Gefersa Power Transmission Project, which involved the acquisition and installation of equipment — including transformers, outgoing line bays, and transformers bays — at the Fincha’a-1, Fincha’a-2, Ghedo, and Gefersa substations, was also financed by the Chinese Government. This issue warrants further investigation. 6. This project is also known as the 230kV Finchaa-Ghedo-Gefersa Transmission Line Construction Project, the Finchaa-Ghedo-Gefersa 230 kV Power Transmission Project, the FGG 2x230KV Power Transmission Project, and the Fincha, Gedo-Gefersa Power Transmission Project. The Chinese project title is 埃塞俄比亚FGG-2 230KV输电线路工程

Number of official sources

7

Number of total sources

15