Completed Mixed AidData Chinese Aid

ICBC provides $470 million buyer’s credit loan for 1870MW Gilgel Gibe III Hydropower Project (Linked to Record ID#59363, 105839)

$470M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Ethiopian Electric Power Corporation (EEPCo)
Country	Ethiopia
Start Date	Jun 30, 2010
End Date	Oct 11, 2026
Duration	5,947 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`34447`

Grant Description

ICBC provides $470 million buyer’s credit loan for 1870MW Gilgel Gibe III Hydropower Project On June 30, 2010, the Industrial and Commercial Bank of China (ICBC) and Ethiopian Electric Power Corporation (EEPCo) signed a $470 million buyer’s credit loan agreement for the 1870MW Gilgel Gibe III Hydropower Project.

📋 Loan / Grant Terms

💰 Loan Amountare as follows: a 13

📅 Maturity13.985 years

⏳ Grace Period2.978 years

The Government of Ethiopia’s Ministry of Finance issued a sovereign guarantee in support of the loan. The borrower also purchased buyer’s credit insurance from Sinosure.

The borrower was expected to use the proceeds of the loan to finance approximately 95% of the cost of a $495,506,200 commercial contract between EEPCo and Dongfang Electric Corporation (DEC) for the electro-mechanical and hydraulic steel structure works component of the 1870MW Gilgel Gibe III Hydropower Project, which was signed on May 12, 2010.

According to the Government of Ethiopia’s Aid Management Platform (AMP), 15 loan disbursements (worth ETB 21,904,463,534) took place between 2012 and 2019: an ETB 1,102,591,696 disbursement on January 8, 2012, an ETB 1,256,266,119 disbursement on April 8, 2012, and an ETB 241,864,376 disbursement on October 10, 2012, an ETB 519,482,004 disbursement on April 8, 2013, an ETB 149,053,030 disbursement on October 7, 2013, an ETB 1,120,000,000 disbursement on October 7, 2014, an ETB 323,232,323 disbursement on January 7, 2015, an ETB 450,503,881 disbursement on October 7, 2015, an ETB 200,679,002 disbursement on January 7, 2016, an ETB 286,223,972 disbursement on April 7, 2016, an ETB 164,701,197 disbursement on July 7, 2016, an ETB 1,359,428,420 disbursement on April 7, 2017, an ETB 116,911,052 disbursement on July 7, 2017, an ETB 1,045,494,392 disbursement on March 20, 2018, and an ETB 13,568,032,070 disbursement on September 9, 2019.

The purpose of the project was to supply and install electrical and mechanical equipment (turbines) for the construction of the Gilgel Gibe III Dam (also known as the Gibe III Dam). The Gilgel Gibe III Dam is 610 m-long (2,000 ft) and 243 m (797 ft) high roller-compacted concrete dam.

It withholds a reservoir with a capacity of 14.7 km3 (3.5 cu mi) and a surface area of 210 km2 (81 sq mi), collecting with a catchment area of 34,150 km2 (13,190 sq mi). The reservoir's live (active or ‘useful’) storage is 11.75 km3 (2.82 cu mi) and dead storage 2.95 km3 (0.71 cu mi).

The normal operating level of the reservoir is 892 m (2,927 ft) above sea level with a maximum of 893 m (2,930 ft) and minimum of 800 m (2,600 ft).

The dam's spillway is 108 m (354 ft) long and floodgate-controlled with a maximum discharge capacity of 18,000 m3/s (640,000 cu ft/s). Water above 873 m (2,864 ft) above sea level can be discharged through its gates.

Feeding the dam's power house are two penstocks that each branch into five separate tunnels for each individual turbine.

The power house contains ten 187 MW generators supported by Francis turbines for a total installed capacity of 1,870 MW. DEC was responsible for the electro-mechanical and hydraulic steel structure works component of the project. Salini Costruttori S.p.A.(SPA), an Italian contractor, completed the civil engineering construction of the project.

The electro-mechanical portion of the project involved the design; build; site testing and commission of 10 vertical type hydraulic turbines; 10 vertical axis synchronous generators; and other transformer-related tasks.

The hydro mechanical portion included the installation of steel structures; gates; a draft tube; a diversion tunnel; a spillway and ecological discharge gates.

The construction of the Gibe III dam began in July 2006 along the Omo River but the project provoked a backlash from environmental activists.

The African Development Bank and the European Investment Bank were originally supposed to fund the electro-mechanical costs for the project, but they eventually backed out due to the project's perceived negative environmental and social impacts. Two Environmental and Social Impact Assessments and a Resettlement Action Plan were completed.

In August 2015, Ethiopia commissioned the first phase of electricity generation at the Gibe III plant from three turbines with an output of 561MW. Then, on December 17, 2016, the Gibe III dam was officially inaugurated.

The plant has 10 turbines each with a capacity of 187MW equaling a total capacity of 1,870MW, increasing Ethiopia's total electricity output to 4,238 megawatts. This project also reportedly created more than 7,000 jobs.

There are some indications that the ICBC loan for the 1870MW Gilgel Gibe III Hydropower Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2016, the ICBC loan was restructured to reduce total principal and interest payments by 50% over a 3-year period.

The debt restructuring agreement was 'restructured such that [the borrower] [would] only be required to pay 20% of the amount [outstanding] in 10 instalments starting immediately [after the 3-year principal and interest payment moratorium] on a semi-annual basis and the remaining 80% [of the amount outstanding would] be paid in 10 subsequent instalments.' It reportedly provided $20 million of annual cash flow relief to the borrower.

After the debt restructuring agreement was finalized, the loan's last scheduled principal payment date was July 20, 2026 and the loan's last scheduled interest payment date was January 20, 2026. As such, the debt restructuring agreement effectively provided a 2-year maturity extension.

Then, according to the Government of Ethiopia’s Aid Management Platform, as of September 2019, ICBC suspended about $67 million worth of loan disbursements 'due to [the] cross-default situation of the country’ (see Record ID#58616).

Then, after considerable delay, the G20 Common Framework (CF) creditor committee for Ethiopia convened in September 2021, with the French Government and the Chinese Government serving as co-chairs. The CF debt rescheduling talks were still ongoing in mid-2023.

📋 Staff Comments

This project is also known as the Gibe III 10 X 187MW Hydropower Station Construction Project and the Gibe III Hydroelectric Project. The Chinese project title is 吉贝Ⅲ水电站 or 吉布3水电站 or 埃塞俄比亚吉布3水电站 or 埃塞俄比亚GIBE Ⅲ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.
Some sources suggest that the face value of the loan was $420,750,000 (or $421,189,000) and it was co-financed with Standard Bank. This issue warrants further investigation. See https://repub.eur.nl/pub/134509/final-thesis-valeria-lauria-nov-2020.pdf4. The total cost of the project was $1.75 billion. However, ICBC only financed 85% of the total cost of one component of the project (the electro-mechanical and hydraulic steel structure works component).
The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143123101610.
1 Ethiopian Birr (ETB) was equal to 0.075 United States Dollars (USD) in June 2010, which implies that the 15 disbursements (worth ETB 21,904,463,534) recorded in the AMP were worth $1,642,834,765.05, which far exceeds the face value of the ICBC loan that was signed on June 20, 2010. This issue warrants further investigation.
EEPCo and National Bank of Ethiopia reportedly financed other components of the 1870MW Gilgel Gibe III Hydropower Project.
The May 12, 2010 commercial contract (worth $495,506,200) between EEPCo and Dongfang Electric Corporation (DEC) for the electro-mechanical (EM) and hydraulic steel structure (HSS) works of the 1870MW Gilgel Gibe III Hydropower Project consisted of two components: a USD 340,727,870 plus ETB 486,627,544 tranche for the electro-mechanical component a USD 105,227,709 plus ETB 150,919,919 tranche for the hydraulic steel structure works component. A tripartite agreement between EEPCo, Salini Costruttori S.p.A.(SPA) [EPC contractor] and DEC [plant contractor] was signed on July 15, 2010. The commercial contract for EM and HSS works also went into effect on July 15, 2010. See https://web.archive.org/web/20160306224701/http://www.gibe3.com.et/progress.html9. The loan identification number in the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS) is 20798000 and the corresponding project name in DMFAS is ‘GIBE III HYDROELECTRIC PROJECT’. See https://www.dropbox.com/scl/fi/7nrczfanixvivmiyzqx3i/MOFED-Loan-Level-Data-on-Borrowing-Terms-and-Loan-Performance-September-2024_OTHER_PUBLIC.xlsx?rlkey=5sqhh9ii4t3x8cmz0jf6s7cod&dl=010. As of September 2024, the Government of Ethiopia recorded the loan's all-in interest rate as 8.1% in DMFAS. See https://www.dropbox.com/scl/fi/7nrczfanixvivmiyzqx3i/MOFED-Loan-Level-Data-on-Borrowing-Terms-and-Loan-Performance-September-2024_OTHER_PUBLIC.xlsx?rlkey=5sqhh9ii4t3x8cmz0jf6s7cod&dl=011. Several sources indicates that the project was co-financed by China Eximbank (https://repub.eur.nl/pub/134509/final-thesis-valeria-lauria-nov-2020.pdf and https://www.2merkato.com/news/alerts/4872-ethiopia-inaugurated-gilgel-gibe-iii and https://www.webuildvalue.com/en/reportage/gibe-iii-s-hour.html and https://www.thereporterethiopia.com/3005/ and https://www.ft.com/content/2ab8c5a8-45e1-11e0-acd8-00144feab49a). This issue warrants further investigation.

📚 Sources & References

Ethiopia’s Gibe III dam 87% complete
The Gibe 3 Dam – A Test Case for China’s Role in Africa
Gilgel Gibe III Dam
Ethiopia
Gibe III dam Ethiopia
River Basin Development and Human Rights in Eastern Africa — A Policy Crossroads
Ethiopia
China sign agreement for Gibe III hydro project construction
Ethiopia’s massive Gilgel Gibe III Dam starts power generation
Ethiopia’s 1,870MW Gibe III plant begins operations
China’s Biggest Bank to Support Africa’s Most Destructive Dam
Chinese Loan Underwrites Lake Turkana Destruction
Infrastructure Financing Trends in Africa – 2016, 2017 Hydropower Status Report
Project Financing
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Africa and Responsible International Engagement
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Gilgel Gibe III Hydroelectric Power Project
ETHIOPIA INAUGURATES DAM TO DOUBLE ENERGY OUTPUT
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Ethiopia inaugurates Chinese-funded hydropower project
驻埃塞俄比亚大使腊翊凡出席吉贝Ⅲ水电站投运发电仪式
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Diversifying Energy, “东非水塔”变“东非电塔”，东方电气承建非洲“三峡工程
Policy Brief: Chinese-Financed Hydropower Projects in Sub-Saharan Africa
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Gilgel Gibe III Dam
Gibe III HPP
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Gibe III Hydroelectric Project
Gibe III Today
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GIBE III HYDROELECTRIC PROJECT ONGOING
China Loans to Africa, https://www.goalfore.cn/a/549.html
The China Syndrome
Gilgel Gibe III plant set for inauguration today
Ethiopia: Gibe III to be Inaugurated on Saturday
Ethiopia Inaugurated Gilgel Gibe III
东非水塔'变'东非电塔' 东方电气承建非洲'三峡工程
Destroying the ecology? ICBC's African water conservancy loan project sparks controversy
Infrastructure Development in Ethiopia and Its Impact on Economic Diplomacy With China
Gilgel Gibe III dam
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Salini Construction Reports Progress on Gilgel Gibe III
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Gibe III Hydroelectric Project Background
Gibe III HPP - Monthly Report for July 2009
Gibe III Hydroelectric Project, “东非水塔”变“东非电塔” 东方电气承建非洲“三峡工程”
Ethiopia Gib 3 Hydropower Station
DEC About Us, 'East African Water Tower' becomes 'East African Electric Tower'
Dongfang Electric undertakes the construction of Africa's 'Three Gorges Project'
Gibe III Hydropower Plant
CONCLUSIONS REPORT
Complaint on lack of transparency concerning the Gilgel Gibe 3 operation
GIBE III hydropower project
EIB’s clarification of involvement in Gibe 3 project and commitment to East African energy sector
Ethiopia - Gibe III-1b Hydroelectric Power Project (Compliance review) – Management Response
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Gibe III’s Hour
Gilgel Gibe III: Dam-Induced Displacement in Ethiopia and Kenya 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.

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Ethiopian Electric Power Corporation (EEPCo)

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