Active Development AidData Chinese Aid

China Eximbank provides RMB 303.6 million government concessional loan for Phase 2 of the Ethiopia-Djibouti Water Pipeline Project (Linked to Record ID#59425)

¥303.66M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Djibouti
Country	Djibouti
Start Date	Dec 25, 2017
End Date	Apr 17, 2028
Duration	3,766 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`59453`

Grant Description

China Eximbank provides RMB 303.6 million government concessional loan for Phase 2 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.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period7 years

💹 Interest Rate2%

The loan also carried a guarantee from an unspecified guarantor.

The proceeds of the loan (captured via Record ID#59425) 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 USD or 8,460,208,609 DJF) 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.

The 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.

📋 Staff Comments

This project is also known as Phase II of the Transboundary Water Supply Project. The French project title is le Projet Transfrontalier d'adduction d'eau (phase 2) or Le Projet transfrontalier d’Approvisionnement d’eau potable Ethiopie-Djibouti or Adduction d’eau phase II. 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 an 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 (e.g., https://www.journalofficiel.dj/texte-juridique/loi-n13-an-18-8eme-l-portant-ratification-de-la-convention-de-pret-conclue-entre-la-republique-de-djibouti-et-la-banque-exim-de-chine-pour-le-projet-transfrontalier-dadduction-deau-phase-ii/)5 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

Loi N° 13/AN/18/8ème L portant ratification de la convention de prêt conclue entre la République de Djibouti et la Banque EXIM de Chine pour le projet transfrontalier d'adduction d'eau (phase II).
The Bab el-Mandeb Strait: Regional and great power rivalries on the shores of the Red Se
Ethiopia: Power Shortage Hinders Djibouti Water Supply
Conseil de Ministres Mardi 27/03/2018
Press the 5th Tuesday's session 03.27.2018
Law No. 13 / AN / 18 / 8th L ratifying the loan agreement concluded between the Republic of Djibouti and the EXIM Bank of China for the cross-border water supply project (phase II).
Power shortage hinders Djibouti water supply
The Water of Happiness Comes to Djibouti
Projet AEP Ethiopie-Djibouti, rapport-annuel-dfe-2018
SAIS-CARI Loans China
RAPPORT ANNUEL 2017
RAPPORT D’ACTIVITE DU MINSTERE DE L’AGRICULTURE
DE L’EAU
DE LA PECHE
DE L’ELEVAGE ET DES RESSOURCES HALIEUTIQUES
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
DDP Public Investment Program 2021
Loi n° 13/AN/18/8ème L portant ratification de la convention de prêt conclue entre la République de Djibouti et la Banque EXIM de Chine pour le projet transfrontalier d’adduction d’eau (phase II). 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.