China Eximbank provides $249.3 million preferential buyer’s credit for Genale Dawa III-Yirga Alem II-Wolayita Sodo II-Hawassa II Power Transmission Project (Linked to Record ID#69129)

China Eximbank provides $249.3 million preferential buyer’s credit for Genale Dawa III-Yirga Alem II-Wolayita Sodo II-Hawassa II Power Transmission Project On December 27, 2016, the Government of Ethiopia and China Eximbank signed a $249,323,075.34 (ETB 5,608,008,042) preferential buyer’s credit (PBC) agreement for the Genale Dawa III-Yirga Alem II-Wolayita Sodo II-Hawassa II Power Transmission Project.

The Ethiopian House of Representatives ratified the PBC agreement on February 7, 2017 under Proclamation No. 1000/2017. The proclamation went into effect on February 22, 2017. The Government of Ethiopia on-lent the proceeds of the loan to Ethiopian Electric Power Corporation (EEPCo).

The loan's first and last scheduled principal payment dates were July 21, 2024 and January 21, 2037, respectively. Its first and last scheduled interest payment dates were July 21, 2017 and January 21, 2037, respectively.

The borrower was expected to use the proceeds of the PBC to partially finance a commercial (EPC) contract between EEPCo, China Energy Engineering Corporation Limited (CEEC), and Xinjiang Electric Power Design Institute, which was signed in September 2014 and modified on August 22, 2015.

China Eximbank made 8 loan disbursements (worth $212,287,364.45 or ETB 5,650,372,288) between 2017 and 2019: a $124,304,105.62 disbursement on July 20, 2017, a $30,530,211.81 disbursement on August 18, 2017, a $23,090,272.81 disbursement on November 23, 2017, a $7,237,606.93 disbursement on December 8, 2017, a $4,070,685.80 disbursement on December 18, 2017, a $11,054,217.02 disbursement on June 14, 2018, a $3,806,431.81 disbursement on August 3, 2018, and a $8,193,832.65 disbursement on September 11, 2019.

The project involved the construction of a 355 km, 400kV transmission line from the Genale Dawa III substation to the Yirga Alem II substation and the Wolayita Sodo II substation and Hawassa II substation. $195 million of the loan proceeds was earmarked for construction of the transmission line, while the remaining $54 million was earmarked for construction of the substations.

Xinjiang Electric Power Design Institute and CEEC were the general EPC contractors responsible for project implementation.

Sichuan Electric Power Transmission and Transformation Construction Co., Ltd. and NORINCO were also involved (most likely as subcontractors). Construction began in November 2015 and concluded on May 5, 2017. However, the project was not 'fully operationalized' until 2020.

There are some indications that the China Eximbank loan for the Genale Dawa III-Yirga Alem II-Wolayita Sodo II-Hawassa II Power Transmission Project may have financially underperformed vis-a-vis the original expectations of the lender.

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, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects and halted project implementation due to Government of Ethiopia’s rapidly dwindling foreign exchange reserves and debt sustainability challenges.

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.