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BusinessAhead of recess, house endorses over USD 860 mln loan deals

Ahead of recess, house endorses over USD 860 mln loan deals

On the last day of work before the half-year recess, the House of People’s Representatives (HPR) on Tuesday endorsed eight bills on USD 860 million loan agreements the government signed with lenders. The loan agreements were signed with Ethiopia’s traditional lenders, the China Export-Import (EXIM) Bank, the African Development Bank (AfDB), the OPEC Development Fund as well as other multilateral financiers.

According to documents and preambles to the draft bills, the loan agreements are mostly for financing infrastructure such as road projects, electric power transmission lines, water development and irrigation projects.

Unlike other regular sessions, the house endorsed the bills at the same session they were presented. Since it was the final workday before the month-long break, the bills were passed just by reading without them being referred to the relevant standing committees for “further revisions” or scrutiny which usually result in questions for clarification as well as suggestions for amendment.

Of the eight bills, three were loan agreements signed with the Chinese EXIM Bank which includes a loan agreement of some Yuan Renminbi 923.7 million (equivalent to USD 242 million) for financing the Addis Ababa-Gerbi Dam Reservoir, Transmission Line and Treatment Project which was signed first in December 2016. The other two are some USD 249.3 million preferential buyer loan agreement for financing the Genale Dawa III-Yirgalem II-Wolayta Sodo II-Hawassa III power transmission line and USD 120 million for financing work on the Addis Ababa International Airport VIP Terminal I project.

A financing agreement for Participatory Small-scale Irrigation Development Project Phase II (PASIDP II) between the Ethiopian government and the International Fund for Development and the Adaptation for Smallholder Agriculture Program Trust Fund was also another bill the MPs endorsed during the session. According to the bill, the total loan amount is some SDR 72.9 million (equivalent to USD 145.3 million), which was signed in December 2016 in Rome.

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Similarly, the house passed bills including  loan agreements with the OPEC Development Fund worth USD 20 million for financing the Hamusit-Estie road project, and another one worth Unit Account (UA) 25.6 million (approximately USD 20 million) with the African Development Bank (AfDB) for financing the Jimma-Chida and Sodo-Sawla road upgrading project.

The two agreements were signed in Vienna in November 2016 and in Addis Ababa in January 2017, respectively.  In fact, the loan secured from OPEC is just 12 percent of the total cost of UA 191.34 million the Jimma-Chida and Sodo-Sawla road upgrading project requires for its completion. Meanwhile, the stated USD 20 million worth of loans secured from OPEC constitutes almost half of the total budget of some USD 44 million the Hamusit-Estie road project requires. According to a document attached to the bill, the remaining USD 24 million of the total cost would be covered by the Arab Bank for African Economic Development (USD 15 million) and the Ethiopian government (USD nine million).

Another loan agreement endorsed by the house was the second loan agreement the Ethiopian government signed with the OPEC Fund for International Development in September 2016. The loan amount is around USD 104.6 million and is for financing the Mekelle-Dallol and Semera-Afdera power supply for industrial development and access scale-up project.

All of the loan agreements were endorsed within a relatively short period of time since they had already been signed.

MPs recently questioned why most bills related to loan agreements came to the house after they had been signed a long time ago.

The bills endorsed during Tuesday’s session were signed recently – between September 2016 to January 2017.

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