ICBC provides $195.7 million loan for Transmission Lines and Associated Facilities of the Kafue Gorge Lower Hydropower Plant Project (Linked to Record ID#57536, 92289)

📋 Staff Comments

1. The ICBC loan that was issued for this project is not included in the the database of Chinese loan commitments that SAIS-CARI released in July 2020.
2. In 2018, Blackhall’s Laws of Zambia (revised edition of the laws of Zambia containing primary and secondary legislation) published the following information on its website (https://zambialaws.com/): “The USD195,766,479.52 loan facilities agreement dated 17th May, 2018, among Kafue Gorge Lower Power Development Corporation Limited as Borrower, Industrial and Commercial Bank of China Limited as Arranger and Original Lender and Industrial and Commercial Bank of China Limited, Dubai (DIFC) branch as Facility Agent and Security Agent, for the financing of the engineering, procurement and construction of three 330kV transmission lines and associated facilities for the evacuation of power from the 750 MW Kafue Gorge Lower hydroelectric power station.” See https://www.zambialaws.com/Zambia2018Pdfsi/SI%2089%20of%202018.pdf3. AidData has coded this transaction as a collateralized loan because Industrial and Commercial Bank of China Limited, Dubai (DIFC) branch was selected as the security agent (i.e. collateral agent) for the loan. When lenders take collateral as security for their loans, a collateral/security agent is often appointed to enforce rights against the collateral in the event of the borrower's default under the loan. See https://www.zambialaws.com/Zambia2018Pdfsi/SI%2089%20of%202018.pdf4. On November 13, 2017, Kafue Gorge Lower (KGL) Power Development Corporation Limited signed a $1,530,576,039.16 syndicated buyer’s credit facility agreement with China Eximbank and ICBC. This loan is captured via Project ID#57536 and Project ID#92289.
3. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 2.1469-years in 2018. AidData estimates the grace period of the ICBC loan that supported the Transmission Lines and Associated Facilities of the Kafue Gorge Lower Hydropower Plant Project by using this figure. See https://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=0 6. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 13.7669-years in 2018. AidData estimates the maturity of the ICBC loan that supported the Transmission Lines and Associated Facilities of the Kafue Gorge Lower Hydropower Plant Project by using this figure. See https://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=07. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 5.5381% in 2018. AidData estimates the interest rate of the ICBC loan that supported the Transmission Lines and Associated Facilities of the Kafue Gorge Lower Hydropower Plant Project by using this figure. See https://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=0

📚 Sources & References

• '你们完成了一项重要而伟大的工程'——写在赞比亚下凯富峡水电站并网发电之际
• Zesco explains Kafue Gorge Lower hydropower project delay
• REPORT OF THE COMMITTEE ON PARASTATAL BODIES ON THE MANAGEMENT AND OPERATIONS OF THE INDUSTRIAL DEVELOPMENT CORPORATION IN ZAMBIA FOR THE SECOND SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON 21ST SEPTEMBER, 2017
• Kafue Gorge Lower power station nears completion
• REPORT OF THE COMMITTEE ON GOVERNMENT ASSURANCES FOR THE FOURTH SESSION OF THE TWELFTH NATIONAL ASSEMBLY
• CHAPTER 366 - LOANS AND GUARANTEES (AUTHORISATION) ACT: SUBSIDIARY LEGISLATION
• Lupiya Simusokwe - Zambia - Lawyer Profile
• REPORT OF THE COMMITTEE ON NATIONAL ECONOMY
• TRADE AND LABOUR MATTERS FOR THE THIRD SESSION OF THE TWELFTH NATIONAL ASSEMBLY
• Statutory Issue No 89 of 2018 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.