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CDB provides $290 million buyer's credit for Omo Kuraz 3 Sugar Factory Construction Project
| Funder | China Development Bank (CDB) |
|---|---|
| Recipient Organization | Ethiopian Sugar Corporation (ESC) |
| Country | Ethiopia |
| Start Date | Oct 01, 2013 |
| End Date | Aug 18, 2031 |
| Duration | 6,530 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 58627 |
Grant Description
CDB provides $290 million buyer's credit for Omo Kuraz 3 Sugar Factory Construction Project On October 1, 2013, China Development Bank and Ethiopian Sugar Corporation (ESC) signed a $290 million ((ETB 5,482,041,588) buyer's credit (loan) agreement for the Omo Kuraz 3 Sugar Factory Construction Project.
The loan's first and last scheduled principal payment dates were April 15, 2019 and November 20, 2025, respectively. Its first and last scheduled interest payment dates were November 20, 2014 and November 20, 2025, respectively. The Government of Ethiopia provided a sovereign guarantee for this loan.
Sinosure provided buyer’s credit insurance.
The proceeds of the loan were to be used by the borrower to partially finance a $682 million commercial (EPC) contract that it had signed with China National Complete Plant Import Export Corporation (COMPLANT) in March 2013 for the construction of the Omo Kuraz 2 sugar factory and Omo Kuraz 3 sugar factory.
According to the Government of Ethiopia’s Aid Management Platform (AMP), the $290 million (ETB 5,482,041,588) loan for the Omo Kuraz 3 Sugar Factory Construction Project achieved a 127% disbursement rate, with China Development Bank making 26 loan disbursements (worth ETB 6,979,336,757) between 2014 and 2020: an ETB 1,172,821,984 disbursement on October 22, 2014, an ETB 453,001,024 disbursement on January 7, 2016, an ETB 330,122,628 disbursement on October 24, 2016, an ETB 471,115,889 disbursement on October 24, 2016, an ETB 643,304,404 disbursement on February 15, 2017, an ETB 495,381,177 disbursement on February 24, 2017, an ETB 56,046,934 disbursement on February 24, 2017, an ETB 67,915,564 disbursement on February 24, 2017, an ETB 135,831,105 disbursement on February 24, 2017, an ETB 192,758,737 disbursement on September 25, 2017, an ETB 173,552,435 disbursement on September 25, 2017, an ETB 178,567,566 disbursement on September 25, 2017, an ETB 155,187,936 disbursement on September 25, 2017, an ETB 197,510,830 disbursement on September 25, 2017, an ETB 150,937,431 disbursement on September 25, 2017, an ETB 162,720,344 disbursement on October 30, 2017, an ETB 69,543,834 disbursement on November 28, 2017, an ETB 180,489,645 disbursement on November 28, 2017, an ETB 336,584,726 disbursement on January 3, 2018, an ETB 115,129,471 disbursement on November 2, 2018, an ETB 145,502,387 disbursement on November 2, 2018, an ETB 67,849,473 disbursement on November 2, 2018, an ETB 22,531,224 disbursement on November 2, 2018, an ETB 791,866,055 disbursement on October 15, 2020, an ETB 123,566,488 disbursement on October 15, 2020, and an ETB 89,497,465 disbursement on October 15, 2020.
The purpose of the project was to construct the Omo Kuraz 3 Sugar Factory in South Nations Nationalities and Peoples Regional State (SNNPRS) — specifically, within the Kaffa zone (Decha woreda) and Bench Maji zone (Maji and Meinit Shasha woredas) bordering the Omo River.
Upon completion, the facility was expected to produce 800 to 1000 tons of raw, plantation white, and refined sugar a day. COMPLANT was the EPC contractor responsible for project implementation. Construction began on March 11, 2016 and a project completion ceremony took place on October 14, 2018.
However, in October 2019, Ethiopia's Auditor-General Gemechu Dubiso announced that he was investigating the possibility that funds earmarked by ESC for ten state-owned sugar factories (potentially including the Omo Kuraz 3 Sugar Factory) were stolen or misappropriated.
There are also indications that the CDB loan for the Omo Kuraz 3 Sugar Factory Construction Project financially underperformed vis-a-vis the original expectations of the lender. In 2019, the CDB loan was restructured to reduce total principal and interest payments by 50% over a 3-year period.
Then, in July 2021, the Government of Ethiopia announced that it would privatize the Omo Kuraz 3 sugar factory due to debt sustainability problems and the inability of the ESC to fund the operations of the faltering sugar factory and several others.
Staff Comments
- This project is also known as the Omo Kuraz 3 Facility Project. The Chinese project title is OMO3糖厂 or 埃塞奥姆3糖厂. The Amaric project title is ኦሞ ኩራዝ ቁጥር 3 ስኳር ፋብሪካ.
- 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.
- The AMP system identification number for the project is 87143436112184.
- In 2012, China Development Bank issued a $500 million loan (export buyer’s credit) to the Ethiopian Sugar Corporation (ESC) for the construction of the Omo Kuraz 2-3 Project (i.e. the construction of the Omo Kuraz 2 sugar factory and the construction of the Omo Kuraz 3 sugar factory). $210 million of this loan was initially earmarked for the construction the Omo Kuraz 2 facility. However, it appears the CDB later increased the overall lending envelope for the Omo Kuraz 2 facility and the Omo Kuraz 3 facility. The Economic and Commercial Counsellor's Office of the Embassy of the People's Republic of China in Ethiopia also reported that the China Construction Bank (CCB) supported the Omo Kuraz 3 project, but it is unclear how much, if any, the CCB actually contributed to the project (see '埃塞总理和厄特总统出席中企承建的OMO3糖厂竣工仪式’).
- The loan identification number in the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS) is 20854000 and the corresponding project name in DMFAS is ‘OMO-KURAZ 3 SUGAR FACTORY’. 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=06. As of September 2024, the Government of Ethiopia recorded the loan's all-in interest rate as 8.36% 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=07. Several sources suggest that the loan was originally issued with a 3-year grace period. However, DMFAS records a 5.54-year grace period (and a final principal payment date of April 15, 2019). This discrepancy warrants further investigation.
- According to field research undertaken by Dr. Valeria Lauria, CDB approved a 3-year moratorium of 50% of the borrower's debt service (principal and interest payment) obligations in 2019. See https://repub.eur.nl/pub/134509/final-thesis-valeria-lauria-nov-2020.pdf9. More research is needed to identify the precise date on which the CDB debt rescheduling agreement was signed. One source suggests that it may have come shortly after April 9, 2019 (see https://repub.eur.nl/pub/134509/final-thesis-valeria-lauria-nov-2020.pdf).
Sources & References
- Omo-Kuraz Sugar Development Project
- Omo Kuraz Sugar Factory Three
- Top news items in Ethiopia's major media outlets
- 解晓岩大使出席埃塞OMO2-3糖厂项目签约仪式
- OMO3 Sugar Factory Constructed by COMPLANT Successfully Reached Completion and Production of Sugar
- 埃塞总理和厄特总统出席中企承建的OMO3糖厂竣工仪式
- Public Sector Debt Statistical Bulletin 1 - 22
- Ethiopian Sugar Sector Privatization – Draft Policy and Regulatory Assessment
- Progress Report on the State of Conservation of the Lower Omo Valley heritage property
- 埃塞俄比亚OMO-kuraz3 12000TCD糖厂项目竣工投产启动仪式隆重举行
- Omo investors won’t scrub away Kuraz’s sugary stain
- OMO2糖厂（埃塞俄比亚）
- 公司承建的埃塞俄比亚OMO3糖厂项目圆满竣工并一次性投产出糖
- 埃塞糖业公司与国家开发银行签署贷款协议
- Omo Kuraz III Inauguration Demonstrates Potential to Complete Delayed Mega Projects
- PM Abiy
- President Isaias Joins Premier Abiy for Sugar Factory Inauguration
- Omo Kuraz Sugar Development Project
- 中成进出口股份有限公司 与中信证券股份有限公司 关于请做好中成进出口股份有限公司 发审委会议准备工作的函的回复
- Public Sector Debt Statistical Bulletin No 13
- Omo Kuraz No. 3 Sugar Factory
- Omo Kuraz Sugar Factory Three
- Omo Kuraz 3 Sugar Factory
- 奧姆河谷拓荒者--中成集團衣索比亞OMO糖廠項目實施側記 原文網址：https://read01.com/R80og.html
- Govt to Set up Firm with task of Managing 5 Sugar Factories
- Gov't Presses on with Sugar Estates Privatisation
- International Firms Bid to Consult Sugar Factory Privatisation
- Ethiopia probes possible theft of funds for sugar expansion
- MOFED Loan-Level Data on Borrowing Terms and Loan Performance September 2024_OTHER_PUBLIC
- Beltways of Agency: Drivers
- Modalities and Outcomes of Chinese Engagement in Ethiopian Infrastructure Investments 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 Sugar Corporation (ESC)
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