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Ethiopia - EEPCo Closing in $400m Deal with JP Morgan
The Ethiopian Electric Power Corporation (EEPCo), the state-owned monopoly, is getting close to finalizing a deal with an international investment bank to obtain a 400 mln dollar loans, sources disclosed to Fortune.
JP Morgan Chase, an investment bank headquartered in New York, will be lending the company the money at a six per cent interest rate - an amount observers say is on the high side - to be paid back over 10 years. According to Bloomberg, the average 10-year lending rate to AAA-rated companies in the US is currently 5.63pc.
EEPCo is seeking the loan to finance the construction of a hydroelectric dam project, known as Gibe III, which will be constructed in the Oromia Regional State and have a generating capacity of 1870mw of power. At a projected cost of 1.73 bln dollars, the investment is the largest ever of its kind in Ethiopia. Once completed, the dam is expected to help EEPCo cover 40pc of its target to generate a total of 4,000mw of electrical power by 2010, enough to provide coverage to about half the country.
In the past, EEPCo has relied on construction firms to provide financing for capital-intensive projects. For example, EEPCo in July 2006 tapped Italy's Salini Construction to bring in financiers for the Gilbel Gibe II project, a dam with 425mw of capacity. Salini, which was a partner in the construction of the dam, secured loans from the African Development Bank (AfDB) and the European Investment Bank (EIB), as well as the Italian and Ethiopian governments, to pay for its own costs and services.
THE PROJECT: Gibe III
COST: 1.73 billion dollars
GENERATION CAPCITY: 1,870mw
CONTRACTOR: Salini Const’n
FINANCIERS: AfDB, EIB, Italian and Ethiopia gov’ts
NEW LENDING: JP Morgan
LOAN AMOUNT: 400m dollars
Executives from Salini introduced bankers from JP Morgan Chase to the Ethiopian government, which initially asked the New York bank to funnel the loan through the state-owned Commercial Bank of Ethiopia (CBE), sources disclosed. JP Morgan Chase, however, insisted the federal government provide a guarantee on the loan, a request the government has been reluctant to accept due to recommendations from the World Bank and IMF against it.
According to reliable sources, the discussions between the two parties has been going on for the past six months until a breakthrough came when Finance and Economic Development Minister Sufian Ahmed finally convinced officials of the IMF and the World Bank in October 2007, at the annual joint summit of the two organizations held in Washington D.C., to concede his government's need to furnish the guarantee.
The two sides are expected to sign the loan agreement in two weeks, sources disclosed. If successful, it will be the first infrastructure project JP Morgan Chase has financed in Ethiopia.
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It sounds good. But who is paying it back? I don’t think that we will be any richer to pay that large a lump sum withing right after 10 years.
This sounds a big risk but the infrastructure investment towards generating more energy is a great news in deed.
I therefore say the news which reads “Ethiopia - EEPCo Closing in $400m Deal” is a music to my ears and cerintyly sure it will be very pleasing to a anyone who is genuinely interested in our mother lands development.
Yes – indeed development requires not development talk but requires an appropriate action.
This may be a sad news for the CUD/AAPO comps in particular BUT this time they should
not really tell us they know and feel better than tens of thousands who rallied to make a difference to the poor people in out mother land.
The “I KNOW IT ALL” syndrome is the disease afflicting you and the likes and so far it isn’t known to be contagious through social contact other than deep political influence and disguised nationalism.
Therefore regardless of one political biases – good news should always be praised.
I bet you 10% of this loan doesn’t go to the project. It will go directly to the pocket of woyanes officals. Oh god what you waiting for our great grand childrens are going down to the debt created by this anti ethiopian government.
Thats what im talking about, this is the power. The power reflects that we are capable of doing huge thing, the world will respect and grow if Ethiopia keep build something like this. This is big. Hope to see more work, and plan.
I can’t say how I happy I am with the editorial of nazret.com these days. Its good to keep us informed about the development aswell.It is sodifficult to find un unbiased diaspora news portal at this time. Keep up the Good work.
When it comes to stealing money some people would like to point fingers at woiane….So do you mean that CUD is innocent….I guess the fight in the CUD camp is not Ideology but Money. I don’t trust them when it comes to money. I guess woyane is better. ” kemayawkut melak yemiyawkut seytan sayishal aykerim”
Thank you Nazret for posting such a wonderful and encouraging news that makes our day
brighter. Yeah - it is the responsibility of any government to collect taxes and built such infrastructure for the benefit of its citizens. And when it comes to unity and teritorial integrity Woyane is the worst government that Ethiopia ever had. But,
can we just stop for a second and think where does all this money comes from while
none of us who are criticizing the government from this blog pay not a single cent
back to our community. Please let’s encourage good work and criticize when only things are not going well. In this particular case the Woyannes should be praised - trust me raising 400 million from a NY Bank is not a
simple task. Let God bless Ethiopia. Amen
gebru let me know when you get your share i don’t mind asking my great grand kids to pay off your share.
That is fantastic.
CUD, Isayas and followers cover your eyes and years.
Who are the we any way? The diaspora that is with American citizenship and does not pay a penny in tax to Ethiopia is no part of Ethiopia. In order for one to be called “We” the Diaspora like its counter parts of Eritrea needs to pay 2% or more of annual cumulative annual income tax with interest since the day one has abandoned Ethiopia and ran away from the war of liberation in which many gave their lives and lost an eye a leg or an arm. “We the people” are Ethiopia who work for their country not against it, tax paying citizens and are called to defend their country from a foreign enemy of which the worst is the diaspora and in particular those who finance and dissemination falls information to the media and those who prosecute in a foreign legislative body or those who order an act of terror against Ethiopians, from their hotel rooms in Asmara? Which they suspect by know is next to the room of executioners, whose sword is hoisted to fall on their traitor necks with a wink of an eye at the whim of their hosts very precarious judgement.
Thank you Gebru! u are right.When i read the charman of CUD past and recent history;The real YECHIKA ESHOH malet ersu new.Meblatwan satawk ejuwan tatebech alu.After this nobody trust them.Personaly before this incident also in diffrent reasen i did not trust them. Now pm Meles keep it up!Think about Ethiopia….
To those who do not like any good news about Ethiopia. To those who see any development in Ethiopia as money laundering for Woyane. What are you going to say about this? Woyane is borrowing money to build hydroelectric dam project to light up Woyane’s homes only?
The bank does not give a loan with out seeing a clear project plan. Apparently, Woyane is the only one with clear visionary plans.
Don’t get me wrong. I’m not Woyane nor do I belong to any other name labeled group. I’m simply for Ethiopia and I side with the one who has a clear vision for Ethiopia and I would like to advise my fellow Ethiopians to STOP WHINING AND JUMP IN THE MOVING TRAIN.
The well known strategy of west keeping poor countries with resources in dept so they can get anything they want for cheap. i,e
Having sustainable energy in a country is one of the many things that atract investment. when the project becomes operational it will bring more investment to our country. this is good news and the gov. should be thanked and appreciated.
god bless ethiopia.
Please stop being negative. Some of you are quick to accuse the gov’t at every turn. Because you are full of hate but you try to hide yourself. This is a better gov’t that managed the country’s’ finances than anyone in the past - it’s a fact. Look at what they have accompished in the past few years despite wars and conflicts within. I stood on the opposition side for a long time because I believe that we need a system to make the gov’t accountable at every point. Unfortunately, we have not got one yet. However, I will never criticize the gov’t for the sake of being in the opposition camp. I think that they are very good money managers. That doesn’t mean some are not embezzling the gov’t coffer. But it’s everywhere - look at Halliburton (Dick Cheney) and Black water. We will always have people in every system and gov’t who are going to take advantage. Trust me – If Kinijit was in power they will do the same – they will benefit people who connected to them. It’s a human nature.. but let us see the big picture - don’t get me wrong - it’s not acceptable to me to steal. What I am saying is that they are not completely abusing the wealth and the people.
AGERE PLEASE TRY TO USE YOUR BRAIN HOWEVER IT IS SMALL.UNLIKE YOUR CORRUBT CUDS FUNDS,THE GOVTS FUNDS ARE STRICTLY ACCOUNTED FOR.ARE YOU SAYIG THE TWO BIG DAMS AND ALL THESE PROJECTS ARE BUILT WITH ONLY 10% OF THE FUND.I SWEAR YOU ARE AN IDIOT.YOU CAN HATE WOYANE BUT YOU CANT DENY THE NOBLE WORK THEY ARE DOING TO MAMA ETHIOPIa.pease bro
good new you all see, evry body is happy about meles and our country development! we need more good news about development!
Kewle! ant kawlala
Don’t try ‘to kill and save’. I disagree with woyane in certain practical points as many Ethiopians. But to conclude “when it comes to unity and teritorial integrity Woyane is the worst government that Ethiopia ever had.”
Can U define who handed over the Assab and Massawa ports to Italy? who traded Djibouti to France? May be Ur three thousand years unity and integrity leaders/fathers!
Think cleverly and talk wisely my Ethio-brother, woyane has got many hating supporters like me when it comes to outlooks like Ursand the historical truth. What I mean is many condemn Woyane only for its failures not for taking power from the traditional powerhouse. Thanks!
Why pay 6.0% while the current market is 5.63%. It sounds nonsense. Can’t they shop around
If they can repay the loan in the stated 10yr duration solely from income generated by the dam, then it’s good news. IF additional cash has to be injected just to meet the payments, it is bad news. There are many analytical methods to figure that out (ie, NPV) prior to undertaking the project. A company like EEPCo, largly driven by government decisions, knows very well whether it shouuld or shouldn’t undertake the project. The question is, will they disregard the results of their analysis and go ahead with a project that can’t pay itself. As for the higher interest rate, the extra premium is most likely coming from additional assumed risks such as political instability, corruption etc which is usually an industry-wide range.
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