China Eximbank provides $81.4 million buyer's credit loan for Bole-Lemi and Kilinto Industrial Zone Power Transmission Project

China Eximbank provides $81.4 million buyer's credit loan for Bole-Lemi and Kilinto Industrial Zone Power Transmission Project On December 12, 2017, China Eximbank and Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned power company — signed a $81,401,534.20 (ETB 1,819,025,346) buyer's credit loan agreement for the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project.

The loan's first and last scheduled principal payment dates were July 21, 2024 and January 21, 2034, respectively. Its first and last scheduled interest payment dates were January 21, 2020 and July 21, 2033, respectively. The Ethiopian Government issued a sovereign guarantee in support of the loan.

The borrower was expected to use the proceeds of the loan to finance 83% of the cost of a $98 million commercial contract between EEPCo and TBEA Co., Ltd., which was signed in April 2016.

According to the Government of Ethiopia’s AMP, the ETB 1,819,025,346 loan achieved a 68% disbursement rate, with China Eximbank making a single loan disbursement worth ETB 1,245,292,880 on September 9, 2019.

The purpose of the project was to construct 28.4 km of 400 kV and 230 kV high voltage electricity transmission lines to the Bole and Kilinto Industrial Zones in Addis Ababa, construct a 230/33 kV Kilinto substation, construct a 230/33 kV Bole-Lemi Power substation, construct a 400/230/15 kV Koye Abbo substation, and expand an existing 400 kV Gelan substation.

TBEA Co., Ltd. is the EPC contractor responsible for implementation.

Kilinto, Bole-Lemi, and Koye Abbo substation commissioning and testing activities began in December 2019 and the project was 'fully operationalized' in 2020. However, the project encountered major implementation problems.

In June 2020, an electricity transmission tower collapsed after burglars attempted to steal equipment from it, leaving 22 companies operating in Bole-Lemi Industrial Park without electricity.

There are also indications that the China Eximbank loan for the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project financially underperformed vis-a-vis the original expectations of the lender.

According to the Government of Ethiopia’s Aid Management Platform, as of September 2019, ICBC suspended about $67 million worth of loan disbursements 'due to [the] cross-default situation of the country’ (see Record ID#58616).

Then, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects (including the Bole-Lemi and Kilinto Industrial Zone Power Transmission Project) and halted project implementation due to Government of Ethiopia’s rapidly dwindling foreign exchange reserves and debt sustainability challenges.

Then, after considerable delay, the G20 Common Framework (CF) creditor committee for Ethiopia convened in September 2021, with the French Government and the Chinese Government serving as co-chairs. The CF debt rescheduling talks were still ongoing in mid-2023.