China Eximbank provides $14.06 million buyer’s credit loan for TIH-1 230kV Tekeze-Indeselasse-Humera Power Transmission Project (Linked to Record ID#45047)

Project narrative

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 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. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. China Eximbank and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth approximately ETB 129,601,795 ($14,063,391.24) for the TIH-1 230kV Tekeze-Indeselasse-Humera Power Transmission 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 July 1, 2009 and March 31, 2021, respectively. 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.