China Eximbank provides $8.8 million buyer’s credit loan for BM-2 230kV Bedele-Metu Power Transmission 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. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. China Eximbank, CBE, and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth approximately ETB 81,698,067 ($8,865,191.12) for the BM-2 230kV Bedele-Metu 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 94,570,997.21 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China CAMC Engineering Co. Ltd. (CAMCE), which was signed on December 5, 2007. According to the Government of Ethiopia’s AMP, the ETB 81,698,067 loan achieved a 84.9% disbursement rate, with China Eximbank making 2 loan disbursements (worth ETB 69,430,312) between 2010 and 2011: an ETB 54,242,934 disbursement on March 31, 2010, and an ETB 15,187,378 disbursement on April 8, 2011. According to the AMP, the Chinese Government also disbursed an ETB 23,513,605 grant to the Government of Ethiopia for the BM-2 230kV Bedele-Metu Power Transmission Project on July 7, 2011. The purpose of the project was to construct a 90.4 km, 230kV single circuit electricity transmission line from Bedele substation to Metu (Mettu) substation. CAMCE was the general EPC contractor responsible for project implementation. According to the Government of Ethiopia’s Aid Management Platform (AMP), the project reached completion. However, its precise implementation start and end dates are unknown. Its originally scheduled project completion date was October 1, 2009.