Active Development AidData Chinese Aid

[Suspended] ICBC provides $302.9 million loan for 75 MW Bini à Warak Hydroelectric Power Plant Project

$302.94M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Government of Cameroon
Country	Cameroon
Start Date	Jul 28, 2016
End Date	Aug 15, 2026
Duration	3,670 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`52494`

Grant Description

[Suspended] ICBC provides $302.9 million loan for 75 MW Bini à Warak Hydroelectric Power Plant Project On July 28, 2016, the Industrial and Commercial Bank of China (ICBC) and the Government of Cameroon signed a $302,944,727 loan agreement [ID# ICBC18072016] for the 75 MW Bini à Warak Hydroelectric Power Plant Project.

📋 Loan / Grant Terms

💰 Loan Amountcarried the following borrowing terms: a 17-year maturity

📅 Maturity17 years

⏳ Grace Period5 years

It also appears to be supported by a Sinosure credit insurance policy.

As of December 31, 2020, the loan had achieved a 0% disbursement rate (with an undisbursed balance of CFA 162.5 billion).

The purpose of the project is construct a 75MW hydroelectric dam on Bini a Warak located in the Adamawa Region of Cameroon.

The project involves the construction of a reservoir, tunnels, powerhouses, substations, 70 km, 225 kilovolts (kV) electricity transmission (energy evacuation) lines, 30kv rural electricity transmission lines, access roads, and related infrastructure, the installation of generators, turbines and related equipment.

Upon completion, it is expected that the 560hm3 hydroelectric dam will have installed energy capacity of 75 MW and a 225Kv energy transmission line.

The project initially took shape in 2008 as a result of a US Trade and Development grant (worth $662,000), which established the viability of the project.

Delphos International was appointed as the feasibility study consultant, and an environmental and social impact assessment was conducted by Naldeo and Alpha Technologies Inc.

Then, after the signing of a memorandum of understanding in 2012, a commercial contract for the project was signed in 2013 between Ministère de l'Eau et de l'Energie du Cameroun (MINEE) and Sinohydro Corporation. The final project design was completed in November 2013, and construction began in October 2017.

Preparatory works, site installation activities, access road construction activities, and dyke construction activities were completed by the end of 2018. However, the project underperformed and stalled in 2019.

In November 2019, the Government of Cameroon paid XAF 4 billion in outstanding credit insurance fees (presumably to Sinosure), which it had hoped would unlock loan disbursements from ICBC. However, ICBC did not respond by releasing any loan disbursements. Project implementation was also at a 'standstill' for much of 2020 due to the COVID-19 pandemic.

As of November 2020, the project had only achieved a 9% completion rate. It was rescheduled for completion in 2024.

Then, during his address before the National Assembly on June 28, 2021, Cameroonian Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the project.

He noted that it 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.' As of December 2021, Cameroon’s MINEE was still negotiating with ICBC to try to facilitate the resumption of project implementation (which is dependent upon ICBC making an advance payment to Sinohydro).

Several project milestones were also accomplished in 2021: the implementation activities of the Resettlement Action Plan (RAP) and the Environmental and Social Impact Assessment (ESIA) of the transmission line were completed; and decrees were issued to facilitate payment of compensation to the people affected by the project.

However, the Government of Cameroon's negotiations with ICBC between 2021 and 2023 were unsuccessful.

On April 20, 2023, the Government of Cameroon and Savannah Energy RMC Limited signed an memorandum of understanding (MOU) regarding the potential implementation of the project on a public-private partnership (PPP) basis.

📋 Staff Comments

The Chinese project title is 比尼瓦拉克水电站工程 or WARAK水电站项目. The French project title is Le projet de construction du barrage de Bini à Warak (75 MW) or Projet d'aménagement du barrage hydroélectrique de Bini à Warak or Projet d'Aménagement Hydroélectrique de Bini à Warak.
One source suggests that the loan commitment date was July 30, 2016 rather than January 15, 2016. This issue merits further investigation.
In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it does not record the borrowing terms of this loan. AidData records the borrowing terms that are identified in the Government of Cameroon's 2017 Debt Management Strategy and a March 2021 publication of the Government of Cameroon’s Caisse Autonome d'Amortissements. Also, SAIS-CARI identifies the face value of the loan as $289 million, but the Government of Cameroon's Caisse Autonome d'Amortissements and the Government of Cameroon's Development Assistance Database (DAD) indicates that the face value of the loan is $302,944,727. AidData records the face value that is reported in the DAD.
The project ID number for this transaction in DAD is CAM/001023.
Although several sources refer to this project being ‘suspended’, this appears to be a layman’s explanation for ICBC’s unwillingness to release an advance payment to Sinohyrdro. For the time being, AidData is treating this project as one that is backed by an official commitment and undergoing implementation (since negotiations over ICBC loan disbursements are evidently still underway). However, the status designation of this project will need to be revisited once these negotiations come to a close.
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.
One source suggests that a commercial contract with Sinohydro was signed on September 2, 2019. It is unclear if this is an amendment of the commercial contract that MINEE and Sinohydro signed in 2013. This issue warrants further investigation.
Jing & Partners served as lender counsel. See https://jingpartners.com/bini-a-warak-hydroelectric-power-project/

📚 Sources & References

Financing the Economy - Cameroon Gets Fresh China Funding
Cameroon to Boost Power Output With $300 Million Chinese Loan
MINEE/EDC – Warak Hydroelectric Dam 75 MW – Cameroon - Project Profile
Cameroon: a Chinese loan of FCfa 182 billion to build a 75 MW dam in Warak
Government To Boost Cameroon’s Energy With $109 Million Spending
WARAK水电站项目融资到位
Wini A Warak Hydropower Project, 2015 Bond Prospectus Republic of Cameroon
林文进金建国到公司比尼瓦拉克水电站工程工地指导慰问
GENERAL REPORT ON THE IMPLEMENTATION OF THE THREE YEAR EMERGENCY PLAN TO ACCELERATE ECONOMIC GROWTH
GENERAL REPORT ON THE IMPLEMENTATION OF THE THREE YEAR EMERGENCY PLAN TO ACCELERATE ECONOMIC GROWTH
喀麦隆比尼瓦拉克水电站施工合同正式签署
Le Bilan des 6 dernieres annes
Electric Power Equipment Management
Cameroon: Financing the Economy - Cameroon Gets Fresh China Funding
Water resources and Energy : The driving force of economic growth in Cameroon
Cameroon Gets Fresh China Funding
Cameroon secures fresh funding from China, 2017 PUBLIC DEBT STRATEGY AND PUBLIC DEBT MANAGEMENT PAPER
喀获中国2800亿非郎贷款融资
喀获中国2800亿非郎贷款融资
DOCUMENT DE STRATÉGIE D’ENDETTEMENT PUBLIC STRATÉGIE D’ENDETTEMENT À MOYEN TERME 2017-2019 MINISTÈRE DES FINANCES (MINFI) COMITÉ NATIONAL DE LA DETTE PUBLIQUE (CNDP) ET DE GESTION DE LA DETTE PUBLIQUE 2017
Projet Bini Warak : le « château d’eau du Cameroun » attend son deuxième barrage
EVOLUTION DESGRANDS PROJETS D’INVESTISSEMENT ANNEXE À LA LOI DE FINANCES 2021
PROJET DE LOI DE FINANCES - Direction Générale du Budget
Bini à Warak dam: Cameroon calls on Chinese deputies for a lifting of the financial blockade
Arrêt du barrage de Bini : le Cameroun veut plaider auprès du Parlement chinois pour lever les blocages financiers
Pourquoi le projet de construction du barrage de Bini à Warak ne démarre pas
Cameroun - Energie: Les travaux du barrage (Adamaoua) de Bini à Warak suspendus pour défaut de financements
Barrage de Bini à Warak : les travaux toujours à l’arrêt en raison du non-aboutissement des négociations entre le Cameroun et la banque chinoise ICBC
Barrage de Bini à Warak : le Parlement camerounais entre en scène en vue de lever les blocages financiers
Bini hydropower project: Construction works at a standstill despite numerous negotiations with financial partner ICBC (MINEE), https://chambers.com/office/jing-partners-douala-global-2:113596
The minister of Water and Energy before the committee on Finance and the Budget of the national assembly
ANNEXE À LA LOI DE FINANCES 2024 EVOLUTION DES GRANDS PROJETS D’INVESTISSEMENT
Le Cameroun se détourne de la Chine pour le projet hydroélectrique de Bini à Warak
Government of Cameroon 2020 Register of Chinese Loans and Borrowing Terms 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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Government of Cameroon

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