Completed Mixed AidData Chinese Aid

China Eximbank provides $23.1 million buyer’s credit loan for FGG-2 230kV Finchaa-Ghedo-Gefersa II Power Transmission Project (Linked to Record ID#45047)

$23.14M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Commercial Bank of Ethiopia (CBE)
Country	Ethiopia
Start Date	Feb 24, 2008
End Date	Apr 24, 2028
Duration	7,365 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`92182`

Grant Description

China Eximbank provides $23.1 million buyer’s credit loan for FGG-2 230kV Finchaa-Ghedo-Gefersa II Power Transmission Project In November 2006, China Eximbank and the Government of Ethiopia’s Ministry of Finance and Economic Development signed a $500 million buyer’s credit facility agreement (互惠贷款) — also known as a master loan framework agreement and a master facility agreement — for an unspecified set of development projects.

📋 Loan / Grant Terms

💰 Loan Amountfacility agreement (captured via Record ID#45047) carried the following borrowing terms: a 13-year maturity

📅 Maturity13 years

⏳ Grace Period4 years

All of the subsidiary loans were secured with (i.e., collateralized against) Ethiopia's export receipts to China, which at the time primarily consisted of sesame seed export receipts.

The buyer’s credit facility agreement also required that all Ethiopian exports (export receipts) to China to be overseen by the Commercial Bank of Ethiopia (CBE), the country’s largest state-owned financial institution.

As a source of collateral, the borrower was required to maintain a minimum cash balance in a debt service reserve account (DSRA) at the CBE.

The cash balance of the DSRA (escrow account) was $284,368,041 as of June 30, 2011, $308,914,767 as of June 30, 2012, $300,000,000 as of June 30, 2016, $300,000,000 as of June 30, 2017, $300,000,000 (ETB 8,260,410,000) as of June 30, 2018, $300,000,000 as of June 30, 2019, ETB 10,599,600,000 as of June 30, 2020, ETB 8,058,726,059 as of June 30, 2021, ETB 10,722,750,953 as of June 30, 2022, and ETB 9,832,603,839 as of June 30, 2023. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement.

China Eximbank, CBE, and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth approximately ETB 213,216,749 ($23,136,132.51) for the FGG-2 230kV Finchaa-Ghedo-Gefersa II Power Transmission Project on February 24, 2008. The loan's first and last scheduled principal payment dates were December 31, 2011 and March 31, 2021, respectively.

Its first and last scheduled interest payment dates were July 1, 2009 and March 31, 2021, respectively.

The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 246,758,572.61 commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China Gezhouba Group Company (CGGC), which was signed in August 2007.

According to the Government of Ethiopia’s AMP, the ETB 213,216,749 loan achieved a 53% disbursement rate, with China Eximbank making 2 loan disbursements (worth ETB 112,441,086) between 2010 and 2012: an ETB 92,427,591 disbursement on March 31, 2010, and an ETB 20,013,495 disbursement on January 8, 2012.

The project involved the construction of a 67 km, 230 kV transmission line from the Fincha’a-1 (Fincahaa-1) substation to the Ghedo substation, the construction of a 134 km, 230 kV transmission line from the Ghedo substation to the Gefersa substation, the construction of a 12 km, 230 kV transmission line from the Fincha'a-2 (Fincahaa-2) substation to branching point on the Fincha'a-I -Ghedo line, and the construction of a 29 km, 230 kV transmission line from the Neshe hydroelectric power plant (HEPP) to new Fincha'a-II substation.

CGGC was the general EPC contractor responsible for project implementation. However, Anhui Electric Group Co., Ltd. was also involved in the project (most likely as a sub-contractor). This project was originally scheduled to commence on June 20, 2008 and reach completion on June 20, 2009. The power transmission line was ultimately put into operation in June 2011.

📋 Staff Comments

For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details. For this record, the margin was taken as the midpoint between the margin range.
This buyer's credit loan from China Eximbank is not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. 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 AMP system identification number for the FGG-2 230kV Finchaa-Ghedo-Gefersa Power Transmission Project is 8714327100841.
1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 213,216,749 loan commitment recorded in the AMP was worth USD 23,453,842.39 at that time that it was contracted.
This project is also known as the 230kV Finchaa-Ghedo-Gefersa Transmission Line Construction Project, the Finchaa-Ghedo-Gefersa 230 kV Power Transmission Project, the FGG 2x230KV Power Transmission Project, and the Fincha, Gedo-Gefersa Power Transmission Project. The Chinese project title is 埃塞俄比亚FGG-2 230KV输电线路工程.
According to CBE's financial statements for the year ending on June 30, 2012 (https://www.combanketh.et/cbeapi/uploads/2011_12_2037357399.pdf), 'CBE is the administrator of the total loan of USD 499,222,780, granted by EXIM Bank of China to the Ethiopian Electric Power Corporation (EEPCO) and Muger Cement Enterprise (MCE). The said loans are repayable by EEPCO and MCE to CBE in Birr over a period of ten years.'7. The loan identification number in the Government of Ethiopia’s Debt Management and Financial Analysis System (DMFAS) is 20776012 and the corresponding project name in DMFAS is ‘FINCHA-GEDO-GEFERSA II’. See https://www.dropbox.com/scl/fi/7nrczfanixvivmiyzqx3i/MOFED-Loan-Level-Data-on-Borrowing-Terms-and-Loan-Performance-September-2024_OTHER_PUBLIC.xlsx?rlkey=5sqhh9ii4t3x8cmz0jf6s7cod&dl=08. As of September 2024, the Government of Ethiopia recorded the loan's all-in interest rate as 2% in DMFAS (see https://www.dropbox.com/scl/fi/7nrczfanixvivmiyzqx3i/MOFED-Loan-Level-Data-on-Borrowing-Terms-and-Loan-Performance-September-2024_OTHER_PUBLIC.xlsx?rlkey=5sqhh9ii4t3x8cmz0jf6s7cod&dl=0), which suggests the possibility of a debt rescheduling involving an interest rate reduction. This issue warrants further investigation.

📚 Sources & References

FGG-2 230KV FINCHAA-GHEDO-GEFERSA POWER TRANSMISSION PROJECT
Development Assistance from the South: Comparative Analysis of Chinese and Indian to Ethiopia
Ethiopia
Chinese firms sign massive power supply contracts
INVITATION TO BID
Chinese contracts for Ethiopia
China and India and Ethiopia final report - FES Ethiopia
中国葛洲坝集团股份有限公司埃塞俄比亚FGG-2标输变线路工程项目部
FAN Hydropower Project Starts Generating Power
中国葛洲坝集团股份有限公2009年度第一期短期融资券募集说明书下载
FGG 2x230KV Power Transmission Project (Ethiopia)
安徽电气集团股份有限公司, 230kV FGG2 Power T ransmission Project
Ethiopia
CHINA GEZHOUBA GROUP COMPANY LIMITED (600068)
Ethiopian hydro project to commence operations soon
Amerti-Neshi to Start Generating Power in a Week’s Time
CBE Annual Report 2011-2012
CBE Annual Report 2010-2011
Infrastructure Development in Ethiopia and Its Impact on Economic Diplomacy With China
List of Ethiopia- China Cooperation Major Projects from Ethiopia's Ministry of Finance September 2024
MOFED Loan-Level Data on Borrowing Terms and Loan Performance September 2024_OTHER_PUBLIC 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.