China Eximbank provides $541.6 million buyer's credit loan for Phase 1 of 211MW Memve'ele Hydroelectric Power Plant Project (Linked to Record ID#57586)

China Eximbank provides $541.6 million buyer's credit loan for Phase 1 of 211MW Memve'ele Hydroelectric Power Plant Project On January 21, 2013, China Eximbank and the Cameroonian Ministry of Economy, Planning, and Regional Development signed a buyer's credit loan (BCL) agreement (Contract No. BLACAM 2011001) worth $541,566,018 for Phase 1 of the 211 MW Memve'ele Hydroelectric Power Plant Project.

The Ministry of Finance of the Republic of Cameroon agreed to provide the lender with a repayment guarantee (as defined in Article 1 of the BCL agreement). The borrower also purchased buyer's credit insurance from Sinosure.

The borrower was expected to use the proceeds of the loan to finance 85% of the total cost ($637,136,492) of a commercial (EPC) contract between Cameroon’s Ministry of Water and Energy and Sinohydro Corporation, which was signed on April 12, 2012.

As of December 31, 2020, the loan (BCL) had achieved a 100% disbursement rate and the its outstanding amount was equivalent to CFA 203.4 billion.

The Memve'ele Hydroelectric Power Plant Project is a large-scale hydro-electric run-of-river dam and hydroelectric generator plant that involves a barrage that is 1,260 meters long and 14 meters high, with two overflow channels and a grand spillway to the generating plant. The dam site is around 26 square kilometers.

The plant has four generators and turbines each. It is expected to inject 211 MW of electricity into Cameroon's energy supply network. The plant is located in Nyabizan on the Ntem River in the South region, 300 km from Yaounde. Sinohydro Corporation was the EPC contractor responsible for project implementation.

On June 15, 2012, President Paul Biya presided over the ceremony to lay the foundation stone of the project. Construction was completed in August 2016.

Record ID#57586 captures a separate China Eximbank loan worth $141.8 million loan for Phase 2 of the 211 MW Memve'ele Hydroelectric Power Plant Project.

The proceeds of this loan were used by the borrower for the construction of 294 pylons between Nyabizan and Ebolowa to evacuate 211MW of power from the Memve'ele dam to Yaounde, the installation of 225 KV transmission lines, and the construction and installation of three transformer substations with a capacity of 225/90 KV in the localities of Ebolowa, Nkoumou in the South Region and Ahala in the Centre Region.

As of September 30, 2021, the construction of the Nyabizan-Yaoundé evacuation line had achieved a 92% completion rate.

However, the completion of Phase 2 depends on payment of compensation to the people affected by the transmission line’s corridor.

According to the Government of Cameroon, the revenue generated by the power plant and Nyabizan-Yaoundé transmission line since ‘powering up’ from April 2019 to October 2021 amounts to CFAF 45 billion.

In addition, the partial completion of the 211MW Memve'ele Hydroelectric Power Plant Project has reportedly enabled the shutdown of the Ahala, Oyom-Abang, Mbalmayo and Ebolowa thermal power stations.

There are some indications that the China Eximbank loan for Phase 1 of the 211MW Memve'ele Hydroelectric Power Plant Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank.

The lender responded by withholding new loan disbursements.

Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213).

Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions.

The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022.

Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals).

The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed).

Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress.

Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project.

He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding.

He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’