Completed Mixed AidData Chinese Aid

China Eximbank provides $24.4 million buyer’s credit for Addis Ababa–Djibouti Railway Lot 2 Power Supply Project (Linked to Record ID#91818)

¥24.42M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Djiboutian Ministry of Economy and Finance
Country	Djibouti
Start Date	Nov 30, 2015
End Date	Mar 22, 2027
Duration	4,130 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`59420`

Grant Description

China Eximbank provides $24.4 million buyer’s credit for Addis Ababa–Djibouti Railway Lot 2 Power Supply Project On November 30, 2015, the Shanghai Branch of China Eximbank and the Government of Djibouti’s Ministry of Finance signed a $24,420,139 (FDJ 4,339,000,000) preferential buyer's credit (PBC) agreement to support the Addis Ababa-Djibouti Railway Power Supply Project Project Lot 2 (captured via Record ID#59420).

Sinosure provided a credit insurance policy in support of the loan. The loan carried an interest rate of 6-month LIBOR plus a 3.25% margin.

📋 Loan / Grant Terms

💰 Loan Amountare unknown

However, it is known that the Government of Djibouti’s Ministry of Finance was expected to use the proceeds of the $24,420,139 China Eximbank loan and EEPCO was expected to use the proceeds of a $27.32 million China Eximbank loan to finance a $51.72 million (RMB 360 million) commercial (EPC) contract between Electricité de Djibouti and Shanghai Electric Power T&D Engineering Co., Ltd., which was signed on December 24, 2014.

The commercial contract covered Lot 2 (within the borders of Djibouti) and Lot 3 (within the borders of Ethiopia) of the Addis Ababa–Djibouti Railway Power Supply Project.

According to Djibouti’s Ministry of Economy, Finance, and Industry, the PBC (loan) achieved a 67.4% disbursement rate (FDJ 2,926,000,000).

According to July 2020 email correspondence between AidData’s Executive Director and the IMF Mission Chief to Djibouti, the outstanding balance of the $24.4 million PBC was $20 million in 2019.

Lot 2 involved the electrification of the Addis Ababa-Djibouti Railway between the Ali-Sabieh, Holl-Holl and Nagad substations in Djibouti.

It also supported a 63kV electricity transmission line from Nagad to Holl-Holl and Ali Sabieh (measuring 90 km in length).

Lot 3 involved the construction of a new 10.6 km 230kV double-circuit double-bundle transmission line, the construction of three 230kV single-circuit double-bundle transmission lines (measuring 73.25 km in length), the construction of a new 132.21 km 230kV transmission line, and the expansion of an existing 230kV substation.

Shanghai Electric Power T&D Engineering Co., Ltd. was the EPC contractor responsible for Lot 2 implementation. As of 2016, the project had achieved an 85% completion rate. The project eventually reached completion, but its precise completion date is unknown.

There are some indications that the China Eximbank preferential buyer's credit for the Addis Ababa–Djibouti Railway Lot 2 Power Supply Project may have financially underperformed vis-a-vis the original expectations of the lender.

According to the International Monetary Fund (IMF), the stock of the Government of Djibouti's external arrears -- including arrears to China, Belgium, Spain, Iran, Italy, Saudi Arabia, and UAE -- stood at $107 million in March 2020.

Two months later, in May 2020, a Debt Sustainability Analysis (DSA) by the World Bank and the IMF concluded that Djibouti was at a high risk of debt distress.

Then, on November 29, 2022, the South China Morning Post reported that the Government of Djibouti had suspended debt service payment to China Eximbank.

Djibouti’s Ministry of Economy, Finance, and Industry responded to the South China Morning Post report by releasing a public statement on December 7, 2022.

The statement by the Ministry of Economy, Finance, and Industry noted that the Government of Djibouti had honored 85% of its loan repayment obligations in 2022.

It also acknowledged that, as part of the Debt Service Suspension Initiative (DSSI), China Eximbank agreed to suspend principal and interest payments due in 2020 and 2021 under multiple loan agreements, and that the Government of Djibouti’s debt service obligations tripled with the expiration of DSSI.

Then, in 2023, Djibouti’s Ministry of Economy, Finance, and Industry published a report, which identified the Government of Djibouti’s total arrears to China as amounting to DJF 24,104,000,000 ($135,285,797) on December 31, 2022.

📋 Staff Comments

This project is also known as the Addis Ababa-Djibouti Railway Electrification Project Lot. The Chinese project title is 埃塞俄比亚至吉布提铁路（简称“埃吉铁路”）的供电配套项目(第三标段) or 埃塞俄比亚-吉布提铁路电力输送变电站改造扩容项目.
The $27.32 million buyer's credit loan from China Eximbank is not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. These sources do record the China Eximbank PBC that the Government of Djibouti contracted for the Addis Ababa–Djibouti Railway Power Supply Project Lot 2. However, they identify the face value of the PBC as $20 million. The Djiboutian authorities have informed the IMF that the face value of the PBC is $24.4 million.
Record ID#91818 captures a separate China Eximbank loan agreement with the Government of Ethiopia for Lot 1, 3, 4, and 5.
According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Djibouti was 1.2-years in 2015. AidData estimates the grace period of the China Eximbank loan by using this figure. See https://www.dropbox.com/scl/fi/dbhcbaygmx8pu1o1yt1c0/August-2024-IDS-Download-Djibouti-Borrowings-and-Borrowing-Terms-from-Private-and-Official-Sector-PRC-Creditors.xlsx?rlkey=zluni64y24lym8adab5winh8g&dl=05. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Djibouti was 14.7-years in 2015. AidData estimates the maturity of the China Eximbank loan by using this figure. See https://www.dropbox.com/scl/fi/dbhcbaygmx8pu1o1yt1c0/August-2024-IDS-Download-Djibouti-Borrowings-and-Borrowing-Terms-from-Private-and-Official-Sector-PRC-Creditors.xlsx?rlkey=zluni64y24lym8adab5winh8g&dl=0 6. The interest rate that applies to the loan is identified by the following official

📚 Sources & References

https://www.journalofficiel.dj/texte-juridique/loi-n142-an-16-7eme-l-portant-ratification-dun-accord-de-financement-pour-le-projet-de-raccordement-electrique-de-la-ligne-de-chemin-de-fer-djibouti-ethiopie-lot-2/ Sources: Perils of a rail link built with Chinese funds
进出口银行上海分行向吉布提财政部提供出口买方信贷美元贷款
中国进出口银行上海分行向吉布提财政部提供出口买方信贷美元贷款
进出口银行上海分行支持“吉埃铁路”建设
进出口银行上海分行与吉布提财政部签署出口买方信贷协议
中国进出口银行上海分行与吉布提财政部签订贷款协议
Addis Ababa-Djibouti Railway Power Supply Project（lot 2 and lot 3）in Ethiopia
Export-Import Bank of China Shanghai Branch Provides Export Buyer Credit Dollar Loan to Ministry of Finance of Djibouti
進出口銀行上海分行向吉布地財政部提供出口買方信貸美元貸款
Djibouti
Chinese firm sign power project agreement
进出⼝银⾏上海分⾏与吉布提财政部签署出⼝买⽅信贷协议
The Export-Import Bank Shanghai Branch Supports the Construction of the 'Giere Railway'
埃塞俄比亚-吉布提铁路供电项目lot2及lot3标段, 2015
Ethiopia –Djibouti LOT2 & LOT3 of Railway Power Supply Subjects.
Djibouti
Chinese firm sign power project dea
BANKING AND FINANCE
埃塞俄⽐亚-吉布提铁路供电项⽬lot2及lot3标段
Electrification of the new Djibouti-Addis railway line: EDD and Shanghai Electric make strong commitments
进出口银行上海分行支持“吉埃铁路”建设
Ethiopia-Djibouti Railway Power Supply Project
Djibouti : 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Djibouti
Electrification de la nouvelle ligne ferroviaire Djibouti-Addis : EDD et Shanghai Electric prennent des engagements forts, 2 July 2020 IMF Email Correspondence
Chinese Loans to Africa Database
Addis Ababa - Djibouti Railway Power Supply Lot-5
Addis Ababa-Djibouti Railway Power Supply Lot 3
Rail News & Development - Réseau ferroviaire: Infos & Développement - Page 2
Signature d’un accord entre l’EDD et Shanghai Electric pour la construction d’une nouvelle ligne électrique reliant Ali-Sabieh à Nagad
REVUE A MI-PARCOURS DU PLAN NATIONAL DE DEVELOPPEMENT STRATEGIE DE CROISSANCE ACCELEREE ET DE PROMOTION DE L’EMPLOI SCAPE 2015-2019
Djibouti
Chinese firm sign power project deal
Empowering Water with Intelligence: Reviving Business Through Wisdom
Analyse des financements par bailleur
Mobilization of financial resources
Table ronde des bailleurs, rapport-annuel-dfe-2018
Communiqué de la 3ème Séance du Mardi 02/02/2021
Compte Rendu du Porte Parole du Gouvernement des travaux de la 3éme séance du conseil des ministres
Note De Conjoncture Economique
Djibouti suspends China and other loan repayments, banks on forgiveness
The China-Global South Project
Ministère de l'Économie et des Finances - MEFI
Communiqu MEFI
The response to debt distress in Africa and the role of China
Djibouti Economic Monitor Winter 2021: Navigating through the Pandemic and Regional Tensions
IMF POLICY PAPER REVIEWS OF THE FUND’S SOVEREIGN ARREARS POLICIES AND PERIMETER
August 2024 Djibouti Borrowings and Borrowing Terms from 'Private' and Official Sector PRC Creditors
Loi n° 142/AN/16/7ème L portant ratification d’un accord de financement pour le projet de raccordement électrique de la ligne de chemin de fer Djibouti-Ethiopie (lot. 2). 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.

All Grantees

Djiboutian Ministry of Economy and Finance

Interested in applying for this grant?

Complete our application form to express your interest and we'll guide you through the process.

Apply for This Grant