China Eximbank reschedules preferential buyer’s credit for Bui Dam Construction Project (Linked to Project ID#30801, #183, #30086, #30709, #95483)

On September 25, 2007, China Eximbank and the Government of Ghana signed a buyer’s credit loan (BCL) agreement worth $293,506,062 for the Bui Dam Construction Project. Then, on September 3, 2008, China Eximbank and the Government of Ghana signed a government concessional loan (GCL) agreement worth RMB 2.1 billion ($330 million). The BCL carried the following borrowing terms: a 17.2 year-maturity (final maturity date: November 21, 2025), a 5-year grace period (first repayment date: September 3, 2013), an interest rate of CIRR plus a margin of 0.75% (6.13%), a 0.3% commitment fee, and a 0.3% management fee. The GCL carried the following borrowing terms: a 2% interest rate, a 20 year maturity (final maturity date: September 3, 2028), a 7 year grace period (first repayment date: September 3, 2015), a 0.3% commitment fee, and a 0.3% management fee. The GCL is captured via Project ID#30801 and the BCL is captured via Project ID#183. The BCL was collateralized with (a) net revenue from a Power Purchase Agreement (PPA) between Bui Power Authority — an organization with a mandate to plan, execute and manage the Bui Hydroelectric Power Plant Project — and the Electricity Company of Ghana (ECG) for the purchase of the energy to be generated from the Bui hydroelectric power plant, and (b) receivables from Ghana Cocoa Board’s sale of up to 30,000 tons of main crop cocoa and 10,000 tons of light crop cocoa per annum to Genertec International Corporation of Beijing under a 20-year, Cocoa Sales Agreement (CSA); and (c) and a mortgage of the land and building and equipment and machinery of the Bui Hydroelectric Power Plant. The cocoa beans were sold at the prevailing market price rather than a fixed price, and the proceeds were to be placed in a Government of Ghana bank account to facilitate loan repayment (and provide a source of security for the BCL). Then, once the dam was operational (and the cocoa agreement came to an end), 85% of the proceeds from sales of energy generated by the Bui hydroelectric power plant were to be placed in an escrow account held by China Eximbank to facilitate loan repayment (and provide a source of security for the BCL). The borrower was expected to maintain a minimum cash balance in the escrow account. The escrow account balance was $27,275,000 in 2018 and $25,582,000 in 2019. The Government of Ghana bank account (for the cash proceeds from COCOBOD’s sale of cocoa to Genertec International Corporation of Beijing) had a balance of $167,816,000 in 2018 and $209,783,000 in 2019. The GCL, by contrast, was not collateralized; it was backed by the full faith and credit of the Government of Ghana. The borrower also purchased a buyer’s credit insurance policy from Sinosure at a cost of $25 million for the BCL (i.e. 8.5% of the face value of the BCL). According to the Government of Ghana’s Development Cooperation Management Information System (Gh-DCMIS), the $293,506,062 loan (BCL) and the $330,000,000 loan (GCL) jointly achieved a 81.2% average disbursement rate, with China Eximbank making 30 loan disbursements (worth $505,088,349.00) between 2009 and 2012: a $57,786,692.00 disbursement (for invoice/interim payment certificate #1) on May 15, 2009, a $35,217,544.00 disbursement (for invoice/interim payment certificate #2) on February 27, 2009, a $10,896,807.00 disbursement (for invoice/interim payment certificate #3) on October 26, 2009, a $27,469,679.00 disbursement (for invoice/interim payment certificate #4) on December 15, 2009, a $6,865,488.00 disbursement (for invoice/interim payment certificate #5) on January 18, 2010, a $9,390,036.00 disbursement (for invoice/interim payment certificate #6) on February 25, 2010, a $13,754,282.00 disbursement (for invoice/interim payment certificate #7) on May 9, 2010, a $18,208,899.00 disbursement (for invoice/interim payment certificate #8) on July 23, 2010, a $6,755,424.00 disbursement (for invoice/interim payment certificate #9) on July 23, 2010, a $8,919,668.00 disbursement (for invoice/interim payment certificate #10) on August 18, 2010, a $7,321,959.00 disbursement (for invoice/interim payment certificate #11) on September 20, 2010, a $6,563,979.00 disbursement (for invoice/interim payment certificate #12) on December 10, 2010, a $5,515,930.00 disbursement (for invoice/interim payment certificate #13) on December 6, 2010, a $107,904,311.00 disbursement (for invoice/interim payment certificate #14) on December 30, 2010, a $12,367,797.00 disbursement (for invoice/interim payment certificate #15) on February 28, 2011, a $8,689,838.00 disbursement (for invoice/interim payment certificate #16) on March 18, 2011, a $7,321,338.00 disbursement (for invoice/interim payment certificate #17) on April 28, 2011, a $6,870,418.00 disbursement (for invoice/interim payment certificate #18) on June 7, 2011, a $6,957,804.00 disbursement (for invoice/interim payment certificate #19) on July 22, 2011, a $16,330,457.00 disbursement (for invoice/interim payment certificate #20) on September 13, 2011, a $4,248,349.00 disbursement (for invoice/interim payment certificate #21) on October 31, 2011, a $4,071,390.00 disbursement (for invoice/interim payment certificate #22) on November 30, 2011, a $19,056,526.00 disbursement (for invoice/interim payment certificate #23) on December 28, 2011, a $5,071,871.00 disbursement (for invoice/interim payment certificate #24) on April 12, 2012, a $6,955,729.00 disbursement (for invoice/interim payment certificate #25) on April 12, 2012, a $14,889,380.00 disbursement (for invoice/interim payment certificate #26) on May 18, 2012, a $4,807,999.00 disbursement (for invoice/interim payment certificate #27) on June 22, 2012, a $48,355,586.00 disbursement (for invoice/interim payment certificate #28) on July 31, 2012, a $13,242,808.00 disbursement (for invoice/interim payment certificate #29) on October 12, 2012, and a $3,280,361.00 disbursement (for invoice/interim payment certificate #30) on November 30, 2012. Two additional loans from China Eximbank were negotiated on April 30, 2012 to pay for cost overruns on the dam (the so-called ‘Supplementary Bui Hydroelectric Dam Project’): a $75.4 million preferential buyer’s credit (PBC) with a maturity of 20 years (final maturity date: April 30, 2032), a 5 year grace period (first repayment date: April 30, 2017), and a 2% interest rate and a $76,206,939 buyer’s credit loan (BCL) with a maturity of 13.5 years (final maturity date: November 21, 2025), a 2 year grace period (first repayment date: April 30, 2014), and an interest rate of 6-month LIBOR (0.731% in April 2012) plus a 4% margin. The $75.4 million PBC is captured via Project ID#30086 and the $76,206,939 BCL is captured via Project ID#30709. According to the Government of Ghana’s Development Cooperation Management Information System (Gh-DCMIS), the $75.4 million PBC and the $76,206,939 BCL jointly achieved a 54.7% average disbursement rate, with China Eximbank making 8 loan disbursements (worth $82,949,965.55) between 2014 and 2017: a $18,800,258.00 disbursement (for invoice/interim payment certificate #39) on April 9, 2014, a $8,065,407.00 disbursement (for invoice/interim payment certificate #35) on December 19, 2014, a $1,538,389.00 disbursement (for invoice/interim payment certificate #36) on December 31, 2014, a $3,649,254.00 disbursement (for invoice/interim payment certificate #37) on December 31, 2014, a $6,937,499.00 disbursement (for invoice/interim payment certificate #38) on April 9, 2015, a $14,815,581.00 disbursement (for invoice/interim payment certificate #40) on July 16, 2015, a $12,775,468.25 disbursement (for invoice/interim payment certificate #41) on March 11, 2016, and a $16,368,109.30 disbursement (for invoice/interim payment certificate #42) on January 25, 2017. The 2008 GCL's (principal) amount outstanding was $297,615,000 in 2018, $301,237,000 in 2019, GHS 926,830,000 ($165,505,357) in 2020, and GHS 889,400,000 ($171,038,461) in 2021. The 2012 PBC's amount outstanding was $78,582,000 in 2018, $78,583,000 in 2019, GHS 415,680,000 ($74,228,571) in 2020, and GHS 399,990,000 ($76,921,153) in 2021. The 2007 BCL’s amount outstanding was $166,166,000 in 2018, $143,051,000 in 2019, GHS 621,650,000 ($111,008,928) in 2020, and GHS 618,100,000 ($118,865,384) in 2021. The 2012 BCL’s amount outstanding was $41,348,000 in 2018, $37,137,000 in 2019, GHS 269,920,000 ($48,200,000) in 2020, and GHS 274,000,000 ($52,692,307) in 2021. The 2008 GCL's amount outstanding was $297,615,000 in 2018 and $301,237,000 in 2019. The 2012 PBC's amount outstanding was $78,582,000 in 2018 and $78,583,000 in 2019. The 2007 BCL’s amount outstanding was $166,166,000 in 2018 and $143,051,000 in 2019. The 2012 BCL’s amount outstanding was $41,348,000 in 2018 and $37,137,000 in 2019. The GCL and PBC were eventually rescheduled such that repayments would commence on July 15, 2023 and end on July 15, 2037, which implies a maturity extension of 8.8 years and a grace period extension of 7.8 years for the GCL and a maturity extension of 5.2 years and a grace period extension of 6.2 years for the PBC. The 2% interest rate that originally applied to both the GCL and PBC also increased to 2.7% as part of the rescheduling. The GCL rescheduling is captured via Project ID#95483. The PBC rescheduling is captured via Project ID#95484. The Bui Dam Construction Project had six components: (1) a roller Compacted Concrete (RCC) gravity dam incorporating a 5-bay spillway; (2) three penstocks in the middle of the dam; (3) a powerhouse at the toe of the dam on the left bank; (4) two rock fill saddle dams on the right bank; (5) a switchyard; and (6) 276 km of transmission lines; and a permanent bridge downstream of the dam. Sinohydro was the contractor responsible for project implementation. Its work was overseen by Bui Power Authority. The dam was designed by the French engineering firm Coyne et Bellier, which also served as the consulting engineers on the project. A groundbreaking ceremony was held on August 24, 2007. However, construction did not begin until December 2, 2008. Then, on May 3, 2013, the first generator was inaugurated. The dam was inaugurated on December 19, 2013. However, the project was not completed and handed over to the Ghanaian authorities until November 28, 2016. There are many indications that the China Eximbank loans for the Bui Dam Construction Project have financially underperformed vis-a-vis the original expectations of the lender. First, in August 2017, the Ghana Cocoa Board (Cocobod) — a state-owned company whose export receipts provide an important source of revenue for loan repayment to China Eximbank — told the country’s parliament it was in financial distress due to its loan repayment obligations related to the construction of the Bui Dam. Second, at least two of the four loans were rescheduled. Third, in April 2023, Samuel Kofi Dzamesi, the Chief Executive Officer of BPA revealed that the ECG had accumulated $612 million of payment arrears (overdue payments) to BPA. ECG’s payments to BPA for electricity purchases were originally intended to be the main source of revenue for repaying China Eximbank. Fourth, according to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). Fifth, on December 19, 2022, the Government of Ghana announced a sovereign default, suspending debt service on its Eurobonds, its commercial loans, and most of its bilateral loans.

Additional details

1. The precise dates on which the GCL and PBC rescheduling agreements were signed are unknown. For the time being, AidData assumes that each loan was rescheduled on the calendar day when it was originally scheduled to enter its repayment period (September 3, 2015 for the GCL and April 30, 2017 for the PBC). This issue merits further investigation.

Number of official sources

2

Number of total sources

2