China Eximbank provides $14.2 million buyer’s credit loan for TIH-1 230kV Tekeze-Indeselasse-Humera Power Transmission Project (Linked to Project ID#45047)

In November 2006, China Eximbank and the 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 129,601,795 ($14,256,197.45) for the TIH-1 230kV Tekeze-Indeselasse-Humera Power Transmission Project on June 19, 2008. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 150,000,771.67 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and Sinohydro Corporation Ltd. (Sinohydro), which was signed in August 2007. According to the Government of Ethiopia’s AMP, the ETB 129,601,795 loan achieved a 45% disbursement rate, with China Eximbank making 2 loan disbursements (worth ETB 57,906,352 ) between 2010 and 2012: an ETB 45,740,781 disbursement on March 31, 2010, and an ETB 12,165,571 disbursement on January 8, 2012. The project involved the acquisition and installation of equipment — including transformers, outgoing line bays, and transformers bays — at the Tekeze substation, the Indeselasse (also known as Inda Selassie, Endaselassie, and Shire) substation, and the Humera (also known as Himera and ሑሞራ) substation. Sinohydro was the general EPC contractor responsible for project implementation. This project was originally scheduled to commence on August 24, 2007 and reach completion within 11 months (July 24, 2008). However, the substations along the Tekeze-Indeselasse-Humera transmission line was not put into operation until November 14, 2009.

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 TIH-1 230kV Tekeze-Indeselasse-Humera Power Transmission Project is 8714327100838. 4. 1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 129,601,795 loan commitment recorded in the AMP was worth USD 14,256,197.45 at that time that it was contracted. 5. This project is also known as the Tekeze-Indeselasse-Humera Substations Project. The Chinese project title is Tekeze-Indaselasie-Humera(TIH-1)230kV变电站项目.

Number of official sources

6

Number of total sources

12