China Eximbank provides $12.31 million buyer’s credit loan for Alamata-Combolcha-Kotebe Substations Equipment Supply 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. According to the Government of Ethiopia’s Aid Management Platform (AMP), China Eximbank, CBE and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth ETB 113,418,851 ($12,307,813.34) for the Alamata-Combolcha-Kotebe Substations Equipment Supply Project on July 11, 2008. The loan's first and last scheduled principal payment dates were December 31, 2011 and January 21, 2021, respectively. Its first and last scheduled interest payment dates were July 1, 2009 and January 21, 2022, respectively. 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.