China Eximbank provides 4-year maturity extension on $36.45 million buyer’s credit loan for Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project (Linked to Record ID#92174)

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 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 ETB 354,476,531 ($36,452,980.74) for the Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project on September 23, 2008. The loan's first and last scheduled principal payment dates were March 31, 2012 and September 30, 2021, respectively.

Its first and last scheduled interest payment dates were July 1, 2009 and September 30, 2022, respectively.

The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 410,544,213.50 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 354,476,531 loan achieved a 62% disbursement rate, with China Eximbank making 6 loan disbursements (worth ETB 218,318,792) between 2010 and 2012: an ETB 11,081,561 disbursement on March 31, 2010, an ETB 17,955,612 disbursement on July 7, 2011, an ETB 2,680,069 disbursement on October 10, 2011, an ETB 89,359,689 disbursement on January 8, 2012, an ETB 63,176,117 disbursement on October 10, 2011, and an ETB 34,065,744 disbursement on January 8, 2012.

The purpose of the project was to construct a 400 kV, 193.77  km power transmission line that connects Bahir Dar II substation to Debre Markos substation. Its precise implementation start date is unknown. However, as of September 2010, the project had achieved a 75% completion rate. The project was officially completed and inaugurated on March 19, 2011.

It was originally scheduled to commence on June 13, 2008 and reach completion on December 13, 2009.

There are some indications that the China Eximbank loan for the Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project financially underperformed vis-à-vis the original expectations of the lender.

According to the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS), the borrower secured a 4-year maturity extension, with the loan's final maturity date reset to June 30, 2026.