[Cancelled] China Eximbank provides $126 million export buyer’s credit for 84MW Bushat Hydropower Project (Linked to Record ID#42282, #42265)

[Cancelled] China Eximbank provides $126 million export buyer’s credit for 84MW Bushat Hydropower Project On February 8, 2001, the Government of Albania and China Eximbank signed a $126 million buyer’s credit loan (BCL) agreement for the Bushat Hydropower Project (captured in Record ID#66088).

The proceeds from the BCL were to be used by the borrower to partially finance the cost of a commercial contract between the Government of Albania’s national power utility (Korporata Elektroenergjetike Shqiptare or KESH) and China International Water and Electricity Corporation (CWE).

The Chinese Government also pledged to provide an additional RMB 5 million for this project in 2001 (captured in Record ID#42282).

The hydropower plant, which incorporated two generators each with a capacity of 40,000 kilowatts, was originally designed to generate 360 million kilowatt-hours of electricity a year after completion.

However, the project came to a standstill in August 2001 due to concerns about its economic viability and potential environmental impacts. The project as originally conceived by CWE would have been a run-of-river plant with an installed capacity of 84 MW.

It would have featured a diversion weir, a headrace canal, an aboveground powerhouse, and a tailrace canal discharging to the Buna River, some 4.5 km downstream of its confluence with the Drin River.

Since Lake Shkodra – a wildlife refuge shared by Albania and Montenegro – flows into the Buna River in the stretch where the river would be diverted into the powerhouse, its level would have been affected by the project. There would also have been impacts on farm irrigation and water wells along this section of the river.

This raised environmental and social questions. It also created concerns about riparian rights between the two neighboring countries.

In order to address these potential impacts, the International Finance Corporation (IFC) was retained by the Government of Albania in 2006 to redesign and finance the implementation project.

Through its engagement, an alternative to the existing project was developed that would address the environmental concerns. To avoid confusion with the CWE project, the project was renamed Ashta Hydropower Project (HPP).

The Asthma HPP is located on the Drin River in the north of Albania near Shkoder, the fourth largest city in the country.

It will generate 240 million kilowatt-hours of electrical power and supply as many as 100,000 Albanian households with electricity.

The plant is effectively split in two: Ashta 1 first generates electricity where, three decades earlier, the Spathara Reservoir with its effluent weir and several small irrigation plants for farming were erected.

And then, at the end of a 5-km, low-lying bypass channel near the village of Ashta, electricity is generated once again, this time by Ashta 2. The combined capacity of both plants (Ashta 1 and Ashta 2) is 53 megawatts (MW). Ashta I consists of a powerhouse and rubber dam (moveable gate for the existing weir).

Ashta II consists of a headrace channel, a second powerhouse, and a tailrace channel. Both power stations will be equipped with matrix turbines. Instead of one large turbine, this technology employs several small ones. As a result, it is possible to utilize even low heads and thereby increase efficiency.

The design discharge is 560m3 /s for Ashta I and 530m3 /s for Ashta II. Minor adaption works will take place on the existing Spathara Reservoir, which is 2.5 million m3.

The reservoir is regulated by the Spathara weir with a fixed sill, which will be amended by a rubber dam with a power scheme for operations. The project was ultimately implemented on a Build-Own-Operate-Transfer (BOOT) basis.

VERBUND AG (Verbund) and the Ministry of Economy, Trade, and Energy of the Republic of Albania entered into a 35-year concession agreement in 2008.

Then, in 2010, the two project sponsors, EVN AG (EVN) and Verbund negotiated a shareholder agreement to jointly develop and operate the EUR 209 million project. A 15-year power offtake agreement and cascade agreement were also developed with KESH. Construction started in March 2010 and the first turbine was installed in August 2011.

The channel was completed and flooded in April 2012. Test operations started thereafter, with the first electricity fed to the grid in June 2012. Ashta 1 was completed and inaugurated in September 2012, with Ashta 2 commissioned in March 2013. The project officially began supplying power to KESH in April 2013, with final completion declared in July 2013.