Completed Mixed AidData Chinese Aid

Dongfang Electric Corporation provides $38.9 million supplier's credit for Greater Male' Grid Connection Phase I Project

$38.93M USD

Funder	Dongfang Electric Corporation (DEC)
Recipient Organization	State Electric Company Ltd. (STELCO)
Country	Maldives
Start Date	Jul 17, 2018
End Date	Jan 15, 2032
Duration	4,930 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`54280`

Grant Description

Dongfang Electric Corporation provides $38.9 million supplier's credit for Greater Male' Grid Connection Phase I Project On July 17, 2018, Dongfang Electric Corporation (DEC) and State Electric Company Limited (STELCO) — a state-owned power utility in the Maldives — signed a $38.9 million supplier's credit (loan) agreement for the Greater Male' Grid Connection Phase I Project.

📋 Loan / Grant Terms

💰 Loan Amounthas an 8-year maturity

📅 Maturity8 years

The Government of the Maldives issued a sovereign guarantee in support of the loan.

The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of a $45,619,736 commercial (EPC) contract between STELCO and Dongfang Electric Corporation, which was signed on February 12, 2018.

DEC made loan disbursements to STELCO worth $28,491,824 during the calendar year 2020 and $2,909,735 during calendar year 2021.

STELCO made loan repayments to DEC worth $6,251,998 during the calendar year 2020, $6,021,791 during calendar year 2021, and $5,791,5841 during calendar year 2022.

The loan’s amount outstanding was $7,528,082 as of December 31, 2019, $29,767,907 as of December 31, 2020, $26,655,852 as of December 31, 2021, and $20,864,267 as of December 31, 2022.

This project involves the construction of three 132/11kV transformer substations in Male, Hulhumale and Hulhule Airport Island, as well as the 132kV cable lines between the three substations.

Northwest Electric Power Design Institute Co., Ltd. of China Power Engineering Consulting Group (NWEPDI) and Dongfang Electric International Cooperation Co., Ltd. are the contractors responsible for project implementation. The EPC contract went into effect on January 2, 2019. The groundbreaking ceremony for this project took place on March 4, 2019.

The project was ultimately completed on July 24, 2021 when the 132kV transmission lines and substations went into operation. The project was originally expected to reach completion within 12 months (March 4, 2020).

Then, during the calendar year 2020, the Government of Maldives made an MVR 96,405,811 capital contribution to STELCO to ensure that it could honor its obligations under the Dongfang Electric Corporation agreement with Dongfang Electric Corporation.

📋 Staff Comments

STELCO’s 2020 financial statement refers to the July 17, 2018 with Dongfang Electric Corporation as a deferred payment agreement (DPA). This issue warrants further investigation.
Some sources indicated that the 38.9 million supplier's credit (loan) agreement was signed on February 12, 2018 rather than July 17, 2018. This issue warrants further investigation.
The contract with Dongfang Electric Corporation is repayable over an 8-year period and the contractor payable is determined based on the percentage of completion of the project and the contractual cash flows have been discounted at a rate of 4.8%. According to the discounted cash flow (DCF) method, the discounted contractual cash flow should be at the financial asset’s effective interest rate. Therefore, AidData assumes an effective interest rate of 4.8%.
The Chinese project title is 马尔代夫马累岛环网（一期）项目.
Given that the loan was issued on July 17, 2018 and the first known loan repayment took place in 2020, AidData assumes for the time being that the grace period was 1.5-years in length. This issue warrants further investigation.
The amounts outstanding and repayments data are drawn from https://www.dropbox.com/s/q82x5hte85kc20e/105._Statement_of_Government_Guarantees_Audit_Report_2021.pdf?dl=0 and https://www.dropbox.com/s/rik8ynrjweat5aw/StatementOfGovernmentGuaranteesFinancialYear2020%20%281%29.pdf?dl=0 and https://www.audit.gov.mv/Uploads/AuditReports/2024/02February/25._Statement_of_Government_Guarantees_2022___Financial_Statement_Audit.pdf

📚 Sources & References

NWEPDI signs EPC agreement on Maldives power transmission project
DEC’s New Milestones in Maldives
The 1st T&S EPC Contract Undertaken by DEC Come into Full Force
Male-Hulhumale high voltage cable project halted as graft probe begins
NWEPDI signs EPC agreement on Maldives power transmission project
马尔代夫马累岛环网（一期）项目胡鲁马累站主体结构顺利结顶
中国能建规划设计集团统筹做好境外疫情防控和生产经营工作
Power grids of Male'
Hulhule', and Hulhumale' to be connected by mid-2020
对外投资合作国别（地区）指南马尔代夫（2019年版）
Government Guaranteed Debt
Government of Maldives Active Sovereign Guaranteed Debt as at end June 2019
Greater Male’ Grid Connection Phase 1,Project Ground Breaking Ceremony.
Greater Male' Grid Connection Phase 1,Project Ground Breaking Ceremony.
Annual Financial Review FY 2020
Annual Financial Review FY 2019
Chinese electric firm contributes to power infrastructure construction in Maldives
STATE ELECTRIC COMPANY LIMITED FINANCIAL YEAR 2020
Annual Financial Review FY 2020
STELCO contracts china company to establish electricity network
Statement of Government Guarantees Financial Year 2020
一带一路 - 马尔代夫大马累岛环网（一期）总承包项目开工
马尔代夫马累岛环网（一期）项目胡鲁马累站主体结构顺利结顶
马尔代夫首个高压电网项目投运
马尔代夫首个高压电网项目投运！
NWEPDI signs EPC agreement on Maldives power transmission project
Statement of Government Guarantees Financial Year 2021
Statement of Government Guarantees Financial Year 2022 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.