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ICBC provides $825 million export credit facility for 600MW Morupule B Power Plant Construction Project (Linked to Record ID#98173)
| Funder | Industrial and Commercial Bank of China (ICBC) |
|---|---|
| Recipient Organization | Botswana Power Corporation |
| Country | Botswana |
| Start Date | Jun 15, 2009 |
| End Date | Sep 10, 2026 |
| Duration | 6,296 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 40 |
Grant Description
ICBC provides $825 million export credit facility for 600MW Morupule B Power Plant Construction Project On June 15, 2009, the Industrial and Commercial Bank of China (ICBC) and Botswana Power Corporation (BPC) — a state-owned power company in Botswana — signed a $825,048,559.40 export credit facility agreement for the 600MW Morupule B Power Plant Construction Project.
The borrower was expected to repay the loan between December 2012 to June 2029.
It was also expected to use the loan proceeds to finance 85% of the cost of a $970 million commercial (EPC) contract with China National Electric Equipment Corporation (CNEEC), which was signed in November 2008.
Sinosure and World Bank insured the buyer's credit loan (export credit facility) and the Government of Botswana’s Ministry of Finance also provided a sovereign guarantee.
As an additional credit enhancement, the borrower agreed to maintain a minimum cash balance of $33 million (equivalent to one principal and interest repayment/installment) in a Debt Service Reserve Account (DSRA).
The Government of Republic of Botswana funded the DSRA with P300 million while Botswana Power Corporation paid the balance of P48 million. The total cost of the Morupule B Power Project was $1.6623 billion. It was financed according to a 70:30 debt-to-equity ratio.
ICBC contributed $825 million of debt financing, while the World Bank, and the African Development Bank contributed $136.4 million and $202.5 million of debt financing, respectively. The 30% equity contribution ($498.4 million) came from Botswana Power Corporation and the Government of Botswana.
In addition to the long-term (20-year) export credit facility, ICBC provided a short-term $140 million equity bridge loan to the project sponsor (BPC) to ensure that it could meet its equity contribution requirement.
However, it is known that the loan was guaranteed by Standard Bank.
The project involved the construction of a 600MW coal-fired power plant consisting of 4x150MW units — that uses circulating fluidized bed technology — for domestic power generation purpose.
The 600MW Morupule B power plant is located in the township of Palapye, northeast of Gaborone, and it geographically adjacent to the existing 132MW Morupule A power plant. It sources feedstock from the same mine as the existing 132MW Morupule A plant.
The project has three main components: the Morupule B Power Station; a 400kV Morupule B–Phokoje transmission system and associated sub-stations linking the plant to the BPC grid; and a 35-borehole well-field and associated water reticulation system. The coal is sourced from the Morupule coal mine, which is the only major operating coal mine in Botswana.
The Morupule coal mine is operated by Morupule Colliery Limited, a subsidiary of Debswana Diamond Company. China National Electric Equipment Corporation (CNEEC) was the general EPC contractor responsible for implementation. Shenyang Blower Works (Group) Co., Ltd (SBW) also supported the project as a subcontractor.
Site and contractor’s camp accommodation facilities as well as bush clearing activities started in early June 2009 and were effectively completed by the end of July 2009, which facilitated CNEEC-SBW to undertake Topographical Survey and Geotechnical Investigation to confirm the design parameters associated with the in-situ ground geological data at the site area.
The erection of the contractor’s camp facilities started in November 2009. The camp had the capacity to accommodate approximately 1,500 staff. The project's official EPC contract commencement date was April 29, 2009. However, the project's groundbreaking ceremony did not take place until February 19, 2010.
It was originally envisaged that the power plant plant would become operational by October 2012.
However, the project experienced significant delays and CNEEC did not hand over the four power generation units to the BPC until May 4, 2014.
Then, in October 2014, three of the four power generation units broke down, and the Government of Botswana had needed to consider importing energy from South Africa.
The power plant was originally expected to operate at the annual capacity factor of about 80 percent, with annual gross generation of about 4,200 gigawatt-hour (GWh).
However, the plant’s capacity factor was closer to 50 percent, reflecting poor availability and unreliability of the units due to forced outages. Units 1-4 had the capacity to produce 600MW, but they only operated at 21 percent capacity producing only 130MW.
According to BPC's 2019 Annual Report, BPC signed a Defects Remediation Agreement with CNEEC to remedy the plant's defects, which was expected to result in the remediation of all plant defects in a phased manner between 2019 and January 2023.
Efforts were also undertaken to expand the plant’s power generation capacity to 900MW after a tender for construction of two additional units (Unit 5 and 6) was awarded to a joint venture between Japanese Marubeni and South Korea’s Posco Energy.
Staff Comments
- This project is also known as 4x150 MW Morupule B Power Station Expansion Project or the 600MW Morupule B Coal Power Station Project. The Chinese project title is 博茨瓦纳莫鲁卜勒B燃煤电站项目 or 博Morupule电站建设项目.
- The database of Chinese loan commitments that SAIS-CARI released in July 2020 does not record the interest rate that applied to the loan. AidData records the interest rate (6-month LIBOR plus a 1.6% margin) that is reported by the borrower (Botswana Power Corporation) and the Government of Botswana. The effective interest rate that applies to this loan (2.78%) was calculated by taking the average 6-month LIBOR rate during the month (June 2009) when the loan agreement was finalized (1.18%) and adding a 1.6% margin.
- In the event of use of Debt Service Reserve Account to settle a given loan installment, the borrower (Botswana Power Corporation) is required to replenish the account within 2 working days.
- A December 15, 2009 cooperation agreement between Sinosure and the IBRD can be accessed in its entirety via https://documents1.worldbank.org/curated/en/924801468013745596/pdf/Conformed0Version0Cooperation0Agreement.pdf5. A useful overview of the partial credit guarantee from the IBRD can be found at https://documents1.worldbank.org/curated/en/209491468227707381/pdf/593910BRI0Bots10Box358280B01PUBLIC1.pdf and https://documents1.worldbank.org/curated/en/392781485213835961/pdf/ICRR-Disclosable-P112516-01-23-2017-1485213819609.pdf6. The $825.048 million long-term debt was guaranteed by Sinosure (commercial and political risk insurance) for the first 15-years, followed by a partial guarantee from the IBRD/World Bank for the remaining 5-years. Approvals from the World Bank and Sinosure were secured in October 2009.
- Delphos International served as a financial adviser. Minchin & Kelly served as legal counsel to the project sponsor. Clifford Chance and Armstrongs served as legal counsel to the lender.
- One source (https://www.ijglobal.com/articles/107957/morupule-b-emergency-powers) claims that the borrower paid a 'liquidity premium of 3% for debt provider ICBC'. More research is needed to determine if this premium refers to the Sinosure insurance premium.
- According to 2023 Annual Report of Botswana Power Corporation, '[Botswana Power Corporation] has [a] Debt Service reserve account which is maintained as a security for the payments for ICBC loan installment and accessible on demand by [Botswana Power Corporation] and is therefore included in cash and cash equivalents.' See https://www.bpc.bw/about-us/Annual%20Reports/BPC%20Integrated%20Report%202023.pdf
Sources & References
- Botswana: Morupule B Power Project
- ESIA Executive Summary, http://www.worldbank.org/projects/P112516/botswana-morupule-b-generation-transmission-project?lang=en, http://72.167.255.126/index.php?sid=6&aid=1321&dir=2012/June/Tuesday26, http://www.afdb.org/en/projects-and-operations/project-portfolio/project/p-bw-fa0-001/
- Botswana signs economic, energy agreements with China
- China Extends Another Grant to Country, http://search.proquest.com.gate2.library.lse.ac.uk/docview/862927532/13E943EEF1E2EACFA73/5?accountid=9630
- Morupule B power station
- Another 300MW extension for Morupule B
- Botswana - BW:Morupule Generation and Transmission (English)
- China's ICBC
- Standard Bank sign Morupule deal
- ANNUAL STATEMENTS OF ACCOUNTS (ASA) FOR THEFINANCIAL YEAR ENDED 31 MARCH 2018
- Last Generator Set of Botswana Morupule B Project Delivered
- Implementation Status & Results Botswana - Morupule B Generation and Transmission Project (P112516)
- Implementation Completion Report (ICR) Review
- 博茨瓦纳莫鲁卜勒B燃煤电站项目正式开工, （商务部）博茨瓦纳莫鲁卜勒B燃煤电站项目正式开工
- ICBC Makes another Inroad on Investment Banking Business
- Cooperation between ICBC and Standard Bank of South Africa Enters Its Prime
- Cooperation Agreement (Botswana – Morupule B Power Project) between CHINA EXPORT AND CREDIT INSURANCE CORPORATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
- BANQUE AFRICAINE DE DÉVELOPPEMENT PROJET: Projet de centrale d’énergie Morupule B
- Financing Power in Sub-Saharan Africa
- BOTSWANA POWER CORPORATION ANNUAL REPORT 2010
- Accelerating Electricity Access Botswana Power Corporation Annual Report 2019
- Morupule B power station, 2nd Africa Finance: Standard Bank Project Finance Workshop
- IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-78010
- G-2030,TF-13099)
- 中国工商银行对非最大额度贷款协定在博签署
- Botswana Power Corporation Annual Report 2107
- 驻博茨瓦纳大使赵彦博赴莫鲁卜勒B电站开展调研, http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Botswana%25252525252520-%25252525252520The%25252525252520Morupule%25252525252520B%25252525252520Power%25252525252520Project.pdf, http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social-Assessments/ESIA%25252525252520Ex%25252525252520Summary%25252525252520Morupule%25252525252520B%25252525252520Final-22%25252525252520june09.pdf, http://global.factiva.com/aa/?ref=BBCAP00020101124e6bo0020b&pp=1&fcpil=en&napc=S&sa_from=
- ChinaLoansToAfrica©SAIS-CARI.csv
- BPC Annual Report 2020: A 50 Year Journey of Powering Botswana
- China Investment 'Picking Up Pace'
- Botswana to sell struggling Chinese-built power plant
- Cooperation between ICBC and Standard Bank of South Africa Enters Its Prime
- Financial Solutions: Partial Credit Guarantee
- Implementation Completion Report (ICR) Review
- BW: Morupule Generation and Transmission
- Morupule B: Emergency powers
- ICBC cooperates with Standard Bank on 65 projects
- Transactional products and services and services
- Power plant deal lights the way for project finance
- Standard Bank Group Investor Conference
- Beijing
- May 2010: Africa
- Power Indaba 2009
- BOTSWANA POWER CORPORATION ANNUAL REPORT 2021: Moving Towards a Sustainable Future
- Standard Bank Group
- UBS Global Financial Services Conference, bpc 2023
- Counsellor Lan Yuqiang visits Morupule B Power Station 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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Botswana Power Corporation
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