China Eximbank provides $260 million preferential buyer’s credit for Phase 1 of Kpong Water Expansion Supply Project (Linked to Record ID#91808)

China Eximbank provides $260 million preferential buyer’s credit for Phase 1 of Kpong Water Expansion Supply Project On September 20, 2010, China Eximbank and the Government of Ghana’s Ministry of Finance and Economic Planning signed a $260,000,000 preferential buyer's credit (PBC) agreement for Phase 1 of the Kpong Water Expansion Supply Project (captured via Record ID#2004).

The total project cost is $273 million.

China Eximbank covered 95% of the total project cost and the Government of Ghana covered the remaining 5% ($13 million).

The Government of Ghana used proceeds from the PBC to on-lend to Ghana Water Company Limited (GWCL), a Ghanaian state-owned company, a Ghanaian state-owned enterprise. To this end, the Government of Ghana signed a $276,250,000 subsidiary loan agreement with the GWCL on August 25, 2015.

The (principal) amount outstanding under the China Eixmbnak loan (PBC) was GHS 991,940,000 ($177,132,142) as of December 31, 2020 and GHS 933,500,000 ($179,519,230) as of December 31, 2021.

The purpose of the Kpong Water Expansion Supply Project was to increase the supply of water from Kpong Head Works to Accra and Tema and thereby improve the reliability of potable water delivery to domestic, commercial and industrial customers.

It involved construction of a new 353,000 m3 per day intake, expansion of treatment plant to 250,000 m3 per day and construction of new transmission mains through Dodowa, Adenta to Accra Booster Station.

Other works involved the provision of dedicated electricity supply, distribution improvement and construction of terminal reservoirs at Madina, Boi and Okpong. The project was implemented in 3 phases.

Phase 1 involved the construction of a new intake and water pumping station for bulk water supply from Kpong with capacity of 196,000 cubic meters per day. Phase 2 involved the construction of a new treatment plant of 186,000 cubic meters or 41 million gallons a day.

Phase 3 involved the construction of new treated water pumping station as well as a pressure transmission (mains) system from Kpong to Accra through Oyibi to terminate at Okponglo (a suburb of Accra).

The project beneficiary areas included Adenta, Madina, Kwabenya, Ashongman, North Legon, East Legon, West Legon, Ashaley Botwe, Haatso, Boi, Asofaa, Dome and surrounding areas. China Gezhouba Water and Power Group Company Limited was the contractor responsible for implementation. Its work was overseen by Ghana Water Company Limited (GWCL).

Construction began on June 1, 2011 and official project completion ceremony took place on December 23, 2014. However, the project was not fully complete until May 28, 2015. The originally scheduled contractual completion date was June 2015.

In 2019, Ghana Water Company Limited (GWCL) was reportedly negotiating a $373,000,000 loan agreement with China Eximbank to fund the second phase of this project (captured via Record ID#91808).

The Government of Ghana's Development Co-operation Management Information System (Gh-DCMIS) identifies this pipeline project as having an expected loan signing date of August 25, 2022, an expected project commencement date of August 10, 2022, and an expected project completion date of August 30, 2023.

There are some indications that the China Eximbank loan for Phase 1 of the Kpong Water Expansion Supply Project may have financially underperformed vis-a-vis the original expectations of the lender.

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).

Then, 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.