Completed Mixed AidData Chinese Aid

China Eximbank provides $322 million preferential buyer’s credit for Phase 1 of the Ethiopia-Djibouti Water Pipeline Project (Linked to Record ID#59453 and ID#107065)

¥322.05M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Djiboutian Ministry of Economy and Finance
Country	Djibouti
Start Date	Dec 14, 2014
End Date	Oct 07, 2029
Duration	5,411 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`59425`

Grant Description

China Eximbank provides $322 million preferential buyer’s credit for Phase 1 of the Ethiopia-Djibouti Water Pipeline Project On September 2, 2012, a Memorandum of Understanding (MOU) between the Government of the Federal Democratic Republic of Ethiopia and the Republic of Djibouti on Supply of Water to Djibouti was signed.

Then, on September 11, 2013, China Eximbank and the Djiboutian Ministry of Finance signed a $322,050,000 (FDJ 57,163,000,000) preferential buyer’s credit (PBC) agreement for Phase 1 of the Ethiopia-Djibouti Water Pipeline Project (captured via Record ID#59425). However, the loan (PBC) did not enter in force until December 22, 2014.

📋 Loan / Grant Terms

💰 Loan Amountcarried the following terms: a 2% interest rate

📅 Maturity20 years

⏳ Grace Period7 years

💹 Interest Rate2%

The proceeds of the loan were to be used by the borrower to partially finance a $339 million commercial contract between Office National De L'Eau Et De L'assainissement De Djibouti (ONEAD) and CGC Overseas Construction Co. (CGCOC) Ltd., which was signed on April 11, 2013.

The Government of Djibouti was responsible for the remainder of the commercial contract cost (approximately $17 million).

According to Djibouti’s Ministry of Economy, Finance, and Industry, the PBC (loan) ultimately achieved a 108.2% disbursement rate (FDJ 61,826,000,000).

Phase 1 of the Ethiopia-Djibouti Water Pipeline Project involved the construction of a 63-mile long water pipeline from the Ethiopian town of Hadagalla into the interior of Djibouti, where it was expected to supply safe drinking water to 700,000 residents of Ali-Sabieh region, Dikhil region, Arta region and Djibouti City.

CGC Overseas Construction Co. (CGCOC) Ltd. was the contractor responsible for project implementation. Its work was overseen by Office National De L'Eau Et De L'assainissement De Djibouti (ONEAD).

The originally envisaged project implementation start and end dates (as specified in the April 11, 2013 commercial contract) were July 1, 2015 and March 30, 2018. A groundbreaking ceremony took place on March 22, 2015. However, Phase 1 implementation did not commence until March 30, 2015. As of February 2017, ONEAD reported that Phase 1 had achieved an 87% completion rate.

CGC Overseas Construction Co. (CGCOC) Ltd encountered some difficulties during project implementation, including electricity power outages that made it impossible to transmit the water through the pipeline.

CGC Overseas Construction Co. (CGCOC) Ltd was reportedly forced to spend more money than originally anticipated on diesel generators due to power shortages needed to pump the water. Phase 1 was officially completed and handed over to the local authorities on June 30, 2017.

Then, on December 25, 2017, China Eximbank and the Government of Djibouti signed an RMB 303,660,000 (or $43.38 million or DJF 8,460,208,609) government concessional loan (GCL) agreement for Phase 2 of the Ethiopia-Djibouti Water Pipeline Project.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period7 years

💹 Interest Rate2%

The Djiboutian legislature ratified the GCL agreement on June 25, 2018.

This purpose of Phase 2 is to provide electricity to various sites along a 63-mile long water pipeline that runs from the Ethiopian town of Hadagalla into the interior of Djibouti, where it is expected to supply safe drinking water to 700,000 residents of Ali-Sabieh region, Dikhil region, Arta region and Djibouti City.

CGC Overseas Construction Co. (CGCOC) Ltd. is the contractor responsible for the implementation of Phase 2. However, AidData has not yet identified any evidence that Phase 2 implementation has commenced.

There are some indications that the China Eximbank preferential buyer's credit for Phase 1 of the Ethiopia-Djibouti Water Pipeline Project 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.

Then, 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.

In March 2022, the World Bank published a report (entitled ‘Djibouti Economic Monitor Winter 2021’), which noted that ‘liquidity tensions are likely to arise due to the payment of deferred debt service linked to the DSSI, the maturing of the two loans on the water pipeline project connecting Djibouti to Ethiopia loan in 2022, and the Addis Ababa-Djibouti railway project in 2025.’ This statement implies that the Government of Djibouti secured a three-year grace period extension on the $322 million China Eximbank loan (PBC) for Phase 1 of the Ethiopia-Djibouti Water Pipeline Project, which was originally scheduled to enter its principal payment period (and exit its grace period) in late 2019.

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

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 being equivalent to DJF 24,104,000,000 ($135,285,797) as of December 31, 2022. The Government of Djibouti’s total arrears to China increased to DJF 28,867,000,00 by June 30, 2023.

📋 Staff Comments

This project is also known as Phase I of the Transboundary Water Supply Project. The French project title is le Projet Transfrontalier d'adduction d'eau (phase 1) or Le Projet transfrontalier d’Approvisionnement d’eau potable Ethiopie-Djibouti or Adduction d’eau phase I. The Chinese project title is 埃塞至吉布提跨境供水项目.
In 2019, the IMF identified the combined value of the China Eximbank loans for the Addis Ababa–Djibouti Railway Project and Phase 1 of the Ethiopia-Djibouti Water Pipeline project as $814 million (see https://www.imf.org/~/media/Files/Publications/CR/2019/1DJIEA2019002.ashx). In email correspondence with AidData (see source ID#93167), IMF officials subsequently identified the face value of the China Eximbank loan for the Addis Ababa–Djibouti railway project as $491,793,000 and the face value of the China Eximbank loan for phase 1 of the the water pipeline project as $322,050,000, which sums to $814 million. A 2018 annual report published by Djibouti’s Ministry of Economy and Finance (https://www.dropbox.com/s/1tkijc0o367s9eh/rapport-annuel-dfe-2018.pdf?dl=0) also identifies the face value of the face value of the China Eximbank loan for phase 1 of the the water pipeline project as $322,050,000.
In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI identifies the grace period of the China Eximbank PBC as 8-years, rather than 7-years. However, official sources refer to the grace period as 7-years, so AidData relies on this value for the time being. The RMB 303,660,000 GCL that China Eximbank issued in 2017 for Phase 2 is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. 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.
The principal point of contact at ONEAD for this project is Mme Deka Khaireh Allaleh. Phone number: +25377812863. Email address: [email protected].

📚 Sources & References

埃塞俄比亚-吉布提跨境供水项目开工典礼在吉布提隆重举行
ANNEXE de la décision remplaçant la décision C(2012) 9380 relative à une mesure ad hoc de soutien au projet 'Production d'eau potable par dessalement' en faveur de la République de Djibouti à financer sur les ressources du 10ème et 11ème Fonds européen de développement
共享发展新机遇共创合作新辉煌——驻吉布提大使卓瑞生就中吉建交40周年发表署名文章
吉埃引水项目贷款协议在吉签署
Economic Transformation in Djibouti SYSTEMATIC COUNTRY DIAGNOSTIC
China in East Africa and the Horn: ports, trains and industrial zones
RISING TIDE: FIVE DEVELOPMENT PROJECTS IN DJIBOUTI
Why Djibouti’s China debt is raising the alarm
What on earth is Djibouti doing?
Chinese funded Ethio-Djibouti water project to be inaugurated soon
LES DÉFIS DE L’APPROVISIONNEMENT ET DE LA GESTION DE L’EAU
Ethiopia to Djibouti Trans Boundary Water Supply Project Feasibility Report
RAPPORT D’ACTIVITE DU MINSTERE DE L’AGRICULTURE
DE L’EAU
DE LA PECHE
DE L’ELEVAGE ET DES RESSOURCES HALIEUTIQUES
吉布提引来幸福之水
RAPPORT D’ACTIVITE DU MINSTERE DE L’AGRICULTURE
DE L’EAU
DE LA PECHE
DE L’ELEVAGE ET DES RESSOURCES HALIEUTIQUES
集团埃塞—吉布提跨境供水项目入选“一带一路”丛书 - 中地海外集团
吉布提引来幸福之水
Projet Transfrontalier D'Interconnexion D'Eau Potable Ethiopie-Djibouti
Projet AEP Ethiopie-Djibouti
Djibouti : coup d'envoi d'un projet d'adduction d'eau potable entre Djibouti et l'Ethiopie (PAPIER GENERA)
Rapport General Public
符华强大使参加吉埃引水项目贷款协议签署仪式
Lancement des travaux de mise en œuvre du projet transfrontalier d’approvisionnement en eau : Hadagala ou le château d’eau de Djibouti
葛华参赞等赴吉-埃引水项目施工现场开展安全生产巡查工作
符华强大使参加吉-埃跨境引水项目奠基仪式
Ethio-Djibouti water pipeline inaugurated, salt port opens for business
The commissioning of the Djibouti-Ethiopia water supply project under the patronage of the President of the Republic of Djibouti
Counselor Ge Hua went to the construction site of the Djibouti-Ethiopia water diversion project for safety inspection
China
Djibouti, and the New York TImes: How Much Debt?
DJIBOUTI – Water trade between Djibouti and Ethiopia
Water trade between Djibouti and Ethiopia
Djibouti
China sign loan agreement for cross-border water project, 14 Feb 2020 Correspondence with IMF on Face Value of China Exim bank loan for the Ethiopia-Djibouti Water Pipeline Project
Djibouti : 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Djibouti
Projet AEP Ethiopie-Djibouti
DJIBOUTI 2014 ARTICLE IV CONSULTATION—PRESS RELEASE; AND STAFF REPORT
PROGRAMME D'INVESTISSEMENT PUBLIC 2015
Djibouti: 2015 Article IV Consultation—Press Release; and Staff Report
PR15/587
December 28, 2015
Djibouti International Water Supply Project
Djibouti transnational water supply project
Chinese-built modern Ethio-Djibouti railway begins commercial operations
Chinese Loans to Africa Database, rapport-annuel-dfe-2018
SAIS-CARI Loans China
RAPPORT ANNUEL 2017
埃塞至吉布提跨境供水项目通水仪式圆满结束, 【今日头条】吉布提引来幸福之水
中非·案例方案典范丨三方合作跨境供水让荒漠变绿洲
埃塞俄比亚-吉布提跨境供水案例：三方合作，荒漠变绿洲
Ismail Omar Guelleh uses water as tool to assert independence from Addis
GENERAL OVER VIEW OF Ethiopia to Djibouti Trans- Boundary Water Supply Project
La société chinoise d’ingénierie spécialisée dans la construction d’infrastructures (CGCOC) finalise la pose souterraine des grandes canalisations traversant les abords Est de la ville d’Ali-Sabieh
Djibouti needs a Plan B for the post-Guelleh era
Analyse des financements par bailleur
Mobilization of financial resources
Table ronde des bailleurs
Rapport D'Activite 2014
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
REVUE A MI-PARCOURS DU PLAN NATIONAL DE DEVELOPPEMENT STRATEGIE DE CROISSANCE ACCELEREE ET DE PROMOTION DE L’EMPLOI SCAPE 2015-2019
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
Note De Conjoncture Economique
Djibouti suspends China and other loan repayments, banks on forgiveness
NOTE DE CONJONCTURE ECONOMIQUE: DEUXIEME TRIMESTRE 2023
Loi n° 68/AN/14/7ème L portant modification de la loi n° 40/AN/14/7ème L portant approbation de l’accord de prêt signé entre la République de Djibouti et la Banque Export-Import de la République Populaire de Chine pour le financement du projet de construction des infrastructure 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