China Eximbank provides $12.4 million buyer’s credit loan for Alamata-Combolcha-Kotebe Substations Equipment Supply 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 113,418,851 ($12,476,073.61) for the Alamata-Combolcha-Kotebe Substations Equipment Supply Project on June 1, 2008. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of a commercial (EPC) contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and an unknown contractor. According to the Government of Ethiopia’s AMP, the ETB 113,418,851 loan achieved a 93% disbursement rate, with China Eximbank making 4 loan disbursements (worth ETB 105,287,248) between 2010 and 2012: an ETB 43,591,509 disbursement on April 8, 2010, an ETB 16,068,027 disbursement on July 7, 2011, an ETB 2,445,704 disbursement on October 10, 2011, and an ETB 43,182,007 disbursement on January 8, 2012. The project involved the supply of equipment to support the Alamata substation, the Combolcha (Kombolcha) substation, and the Kotebe substation. The ultimate purpose of the project was to evacuate power generated by Tekeze hydro power plant from Alamata substation to the main load center at Kaliti via Kombolcha II substation and the Kotebe substation. The project reached completion, but its precise commencement and completion dates are unknown. It was originally scheduled to reach completion on March 1, 2011.

Additional details

1. This project is also known as the Alamata-Kombolcha-Kotebe Substations Project. 2. 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%). 3. 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. 4. The AMP system identification number for this project is 8714327100842. 2. 1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 113,418,851 loan commitment recorded in the AMP was worth USD 12,476,073.61 at that time that it was contracted. 5. In the absence of project commencement and completion dates, AidData has used the first loan disbursement date as a proxy for the project commencement date and the last loan disbursement date as a proxy for the project completion date. This issue warrants further investigation.

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