Completed Mixed AidData Chinese Aid

Bank of China contributes to $79.9 million buyer’s credit loan for STELCO’s 5th Power Development Project

$31.98M USD

Funder	Bank of China (BOC)
Recipient Organization	State Electric Company Ltd. (STELCO)
Country	Maldives
Start Date	Jun 28, 2015
End Date	Aug 19, 2026
Duration	4,070 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`105887`

Grant Description

BOC and China Eximbank contribution to $79.9 million buyer’s credit loan for STELCO’s 5th Power Development Project On May 28, 2015, the Export-Import Bank of China (Record ID#54277) and Bank of China (Sichuan Branch) (Record ID#105887) signed a $79,946,000 buyer’s credit loan agreement with State Electric Company Limited (STELCO) — a state-owned power utility in the Maldives — for the Hulhumalé 5th Power Development Project.

📋 Loan / Grant Terms

💰 Loan Amountcarries the following borrowing terms: an interest rate of 6-month LIBOR plus a 3% margin

📅 Maturity14.5 years

The Ministry of Finance and Treasury of the Government of Maldives provided a sovereign guarantee for this loan. The borrower also purchased buyer’s credit insurance from Sinosure.

The borrower was expected to use the proceeds of the loan to partially finance a $90 million EPC turnkey contract between STELCO and Dongfang Electric International Corporation (DEC), which was signed on May 28, 2015. On December 27, 2016, the Government of Maldives provided sovereign guarantee of $75,395,226 USD for the project.

The loan had achieved a 70% disbursement rate ($55,860,790 out of $79,946,000) as of September 2018 and a 94.3% disbursement rate as of December 2019 ($75,395,226 out of $79,946,000).

The borrower made loan repayments to China Eximbank worth $6,282,935 during calendar year 2020, $1,884,881 during calendar year 2021, and $6,282,935 during calendar year 2022.

The loan’s (principal) amount outstanding was $10,627,589 as of December 31, 2017, $37,584,605 as of December 31, 2018, $75,395,226 (MVR 1,118,854,580) as of December 31, 2019, $69,112,290 (MVR 1,081,698,614) as of December 31, 2020, $67,227,410 as of December 31, 2021, and $56,546,420 as of December 31, 2022.

The project involved the construction of a diesel engine power plant with an installed capacity of 50MW and two sets of seawater desalination systems each with a capacity of 960 tons per day (by utilizing flue gas from the power plant).

Once operational, the power plant was expected to provide sufficient electricity to satisfy the demand of consumers for economic and social development in the greater Malé region, as well as guarantee a supply of power transmission in the area. The plant was also expected to become a supply of fresh water for residents, tourists, and industry.

The Maldivian reported that the plant would guarantee electricity coverage for the next 10 to 20-years for Malé and Hulhumalé.

The power plant was also expected to provide electricity to Malé and Hulhumalé via an interconnection through the China Eximbank-financed Malé-Hulhumalé Bridge (China-Maldives Friendship Bridge) (captured via Record ID#54280). Dongfang Electric International Corporation (DEC) was the EPC contractor responsible for project implementation.

A groundbreaking ceremony for the 5th Power Development Project was on July 31, 2016. The project had achieved a 70% completion rate as of March 26, 2018. The first unit of the plant was connected to the grid on January 6, 2019.

The project was ultimately completed on July 22, 2019, 38 days ahead of what was scheduled in the contract (August 29, 2019).

However, there are some indications that the China Eximbank and Bank of China loan for STELCO’s 5th Power Development Project may have financially underperformed.

During the calendar year 2020, the loan’s guarantor (the Ministry of Finance and Treasury of the Government of Maldives) made an MVR 154,007,552 capital contribution to STELCO to ensure that it could honor its repayment obligations to China Eximbank and Bank of China. Repayments also declined from $6,282,935 during calendar year 2020 to $1,884,881 during calendar year 2021.

📋 Staff Comments

Most sources refer to the China Eximbank as the arranger of the loan, but STELCO's annual reports indicate that both China Eximbank and Bank of China contributed different amounts to this loan. The individual contributions of the 2 banks involved in this $79.9 million syndicated loan were not disclosed. However, based on STELCO's annual report for 2018, the 'caring amounts' for China Eximbank and Bank of China for 2017 and 2018 were exactly 1.5:1. Hence, AidData estimaes that China Eximbank contributed 60% ($47,967,600) and Bank of China contributed 40% ($31,978,400).
This project is also known as the Hulumale Power Plant (5th Power Project) and STELCO’s 5th Power Development Project. The Chinese name of the project is 胡鲁马累第五发电站项目.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
Given that the loan was issued on December 27, 2016 and the first known loan repayment took place in 2020, AidData assumes for the time being that the grace period was 3-years in length. This issue warrants further investigation.
The amounts outstanding and repayments data are drawn from https://www.dropbox.com/s/q82x5hte85kc20e/105._Statement_of_Government_Guarantees_Audit_Report_2021.pdf?dl=0 and https://www.dropbox.com/s/rik8ynrjweat5aw/StatementOfGovernmentGuaranteesFinancialYear2020%20%281%29.pdf?dl=0 and https://www.audit.gov.mv/Uploads/AuditReports/2024/02February/25._Statement_of_Government_Guarantees_2022___Financial_Statement_Audit.pdf6. In 2022, the loan’s (principal) amount outstanding as of December 31, 2021 was revised downward -- from $69,112,290 to $62,829,355 -- after 'changes [were] brought to [the] loan account from DSSI and other reconciliations.' See https://www.audit.gov.mv/Uploads/AuditReports/2024/02February/25._Statement_of_Government_Guarantees_2022___Financial_Statement_Audit.pdf

📚 Sources & References

Synchronization of the First Unit of STELCO Fifth Power Development Project
Maldives
STELCO to conclude Fifth Power Project next month
The Practical Works of Stelco’s 5th Power Development Project Commences
Fifth Power Development Project commences in Hulhumale’
The STELCO Fifth Power Development Project in Maldives has been Accomplished ahead of the Schedule
马累50MW电站扩建项目首台机组发电为马尔代夫首个出口买方信贷项目
STELCO’s Fifth Power Development Mega Project (50MW) Developing at a Steady Progressive Pace
马尔代夫柴油机发电及海水淡化项目首台机组并网发电成功原文链接
Power grids of Male'
Hulhule', and Hulhumale' to be connected by mid-2020
Government Guaranteed Loans
张晓仑出席马尔代夫发电及海水淡化项目开工典礼
Government of Maldives Active Sovereign Guaranteed Debt as at end June 2019
Statement of Government Guarantees Financial Year 2020
STATE ELECTRIC COMPANY LIMITED FINANCIAL YEAR 2020
STELCO signs US$90m power development project
STATEMENT OF GOVERENMENT GUARANTEES FINANCIAL YEAR 2018
Government Debt
Work on Hulhule’-Hulhumale’ link road to begin next month
ENVIRONMENTAL IMPACT ASSESSMENT
For the Hulhule-Hulhumale connecting link road development project
North Male’ Atoll.
Statement of Government Guarantees Financial Year 2021
Statement of Government Guarantees Financial Year 2022
Financial Statements for the Year Ended December 31, 2022, 2021 report, 2020 report, 2019 report, 2018 report Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.

All Grantees

State Electric Company Ltd. (STELCO)

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