Djibouti: Signing Agreement in the Republic of Djibouti

8 April 2015
Kuwait Fund For Arab Economic Development (Kuwait City)

A Framework Agreement was signed between the Government of the Republic of Djibouti and Kuwait Fund for Arab Economic Development concerning the utilization of a Grant of U.S.$ 50 million, the administration of which have been entrusted by the Government of the State of Kuwait to Kuwait Fund, and will be disbursed over five years beginning of the financial year 2014/2015 to contribute in financing of the National Investment Programme in Djibouti.

The Parties also signed agreements pertaining Balbala Water Transportation and Distribution Networks Project in the amount of US$ 21 million, Development of Educational Facilities Project in the amount of US$ 13 million and Social Housing Project in the amount of US$ 5 million, as well as an Agreement toward Public Debt Relief in the amount of US$ 11 million.

A loan agreement was also signed today between the Republic of Djibouti and Kuwait Fund for Arab Economic Development, whereby the Fund will provide a Loan of Kuwaiti Dinars K.D. 9 million equivalent to about US$ 31.5 million, to the Republic of Djibouti to assist in the financing of Jaban’As Power Station Project. An agreement (Project Agreement), concerning arrangements for implementation of the Project, was also signed between Kuwait Fund for Arab Economic Development and Electricity of Djibouti which is undertaking the Project.

The Grant Framework and Projects Agreements were signed on behalf of the Republic of Djibouti by His Excellency Mr. Abdoulkader Kamil Mohamed, the Prime Minister, whereas the Loan Agreement was signed on behalf of the Republic of Djibouti by His Excellency Mr. Ilyas Moussa Dawaleh, Minister of Economy, Finance and Planning in Charge of Privatization, while the Project Agreement was signed on behalf of Electricity of Djibouti by Mr. Djama Ali Guelleh, Director-General of the said Authority. Mr. Hesham Al-Waqayan, the Deputy Director-General of Kuwait Fund for Arab Economic Development, signed on all of the above Agreements on behalf of Kuwait Fund. H.E. Mr. Fayez Mejbel Al-Mutairi, Kuwait Ambassador to Djibouti and Mr. Abdullah S. Al-Saqer, Assistant Regional Manager for Arab Countries attended the signing ceremony of the Agreements.

Firstly: Projects Financed by the State of Kuwait’s Grant :

- Education Project: The project consists of the rehabilitation of about 50 schools, adding classrooms to two existing schools, construction of seven new schools and provide the necessary furniture, equipment and educational materials for about 65 primary and secondary schools and vocational education centers in all provinces of the Republic of Djibouti.

- Water Project: The project consists of constructing a high density polyethylene pipeline main aqueduct with total length of about 15 kilometers to transport drinking water to the project area from existing sources of water and will convey water from the desalination plant, currently under construction, and from water pipe line from Ethiopia. The project also includes the construction of a high density polyethylene water belt network with total length of about 12 kilometers, the rehabilitation of three water storage tanks with total capacity of about 7,500 cubic meters, and the installation of a telemetry network for about 12 wells for the purpose of monitoring and control.

- Housing Project: The project consists of the construction of about 100 low-income housing and a public service facility in the city of Djibouti, ranging in size between 80 and 120 square meters. The project also includes the installation of basic services such as water and sanitation, electricity, roads, including street lighting, and landscaping aesthetics.

- Public Debt Relief: which aims at ease the burden of public debt in Djibouti by providing up to 11 million Dollars distributed over 4 year period with U.S.$ 4.4 million in the financial year 2014/2015 and U.S.$ 2.2 million annually thereafter.

The estimated cost of these Projects is about U.S.$ 50 million. The grant allocations will cover about 100% of the total cost of the proposed projects.. It is expected that the implementation of these Projects will be completed by the end of 2019.

Secondly: Jaban’As Power Station Project

The Project aims at contributing to the social and economic development of Djibouti by increasing the power generation capacity which will contribute to meeting the demand for electricity and reduce the power shedding.

The project consists of the construction of Jaban’As power station with an installed generation capacity of about 56 MW using heavy fuel oil. The power station will be located in the Jaban’As area south of the city of Djibouti, and approximately 4 km away from Doraleh Port. The new plant will be connected to the existing grid via the existing Jaban’As substation using a 63 kV transmission line. The project also includes the provision of the necessary consulting engineering services. The project is expected to be completed by the end of 2017.

The total cost of the Project is estimated at about Djiboutian Franc 11.70 billion, equivalent to about K.D 19.36 million, of which about Djiboutian Franc 9.76 billion, equivalent to about K.D 16.15 million in foreign cost which represent about 48% of the total cost of the Project. The Loan will cover about 55.7% of the total costs of foreign exchange, or 46% of the total cost of the Project.

The Loan is made for a term of 22 years, including a grace period of 5 years, and is to be amortized in 34 semi-annual installments, the first of which will be due on the first date on which interest or other charges on the Loan will fall due, in accordance with the Loan Agreement, after the expiry of the said grace period. The Loan bears an interest rate at 1.5% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement.

By extending this loan, the Fund will have provided 14 loans to the Republic of Djibouti, as the Fund already made 13 loans with a total amount of K.D. 64 million, equivalent to about US$ 218 million, for the financing projects in various development sectors. in addition to two technical assistances in the amount of Kuwaiti Dinars 787 thousand (equivalent to about U.S.$ 2.7 million) to fund a feasibility study in the electricity sector.

The Republic of Djibouti has also obtained four grants from the State of Kuwait, who entrusted the Fund with their administration, totaling about K.D. 17 million (equivalent to about U.S.$ 58 million) .

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