China Eximbank provides $20.1 million buyer’s credit loan for TIH-2 230kV Tekeze-Indeselasse-Humera 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 182,730,882 ($20,100,397.02) for the TIH-2 230kV Tekeze-Indeselasse-Humera Power Transmission Project on June 13, 2008. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 211,508,296.26 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China CAMC Engineering Co. Ltd. (CAMCE), which was signed in August 2007. According to the Government of Ethiopia’s AMP, the ETB 182,730,882 loan achieved a 108% disbursement rate, with China Eximbank making 4 loan disbursements (worth ETB 196,515,571) between 2010 and 2011: an ETB 111,160,027 disbursement on March 31, 2010, an ETB 34,038,992 disbursement on April 8, 2011, an ETB 34,444,388 disbursement on July 7, ,2011, and an ETB 16,872,165 disbursement on October 10, 2011. This project involved the construction of a 160 km, 230 kV transmission line from the Tekeze substation to the Indeselasse (also known as Inda Selassie, Endaselassie, and Shire) substation, and the construction of a 227 km, 230 kV transmission line from the Indeselasse substation to the Humera (also known as Himera and ሑሞራ) substation. CAMCE was the general EPC contractor responsible for project implementation. The Tekeze-Indeselasse-Humera transmission line was put into operation on 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-2 230kV Tekeze-Indeselasse-Humera Power Transmission Project is 8714327100839. 4. 1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 182,730,882 loan commitment recorded in the AMP was worth USD 20,100,397.02 at that time that it was contracted. 5. This project is also known as the Tekeze-Indaselase-Humera 230 kV Power Transmission Project, Contract TIH-2 ‘Supply of 230 kV Transmission Line Materials’ or Tekeze-Indeselasse-Humera Transmission Line Construction Project. The Chinese project title is Tekeze-Indaselasie-Humera(TIH-2)230kV变电站项目.

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