China 's Sinohydro Corp. has started construction of the 1,500 megawatt-capacity Coca Codo Sinclair hydropower station, the largest hydropower project in Ecuador , China Electric Power News said Thursday.

When completed, the hydropower station will be able to produce 8.8 billion kilowatt-hours of electricity a year, said the newspaper, which is under the supervision of the State Electricity Regulatory Commission.

The value of the contract for engineering, procurement and construction totals $2.3 billion, it said.

The Export-Import Bank of China will finance the project through a $1.7 billion 15-year loan with an interest rate of 6.9% and a five-and-a-half-year grace period, said Brazilian finance minister Patricio Rivera earlier.

Negotiations over the project were in jeopardy at one point when Ecuador President Rafael Correa said last December that some of the terms of the loan demanded by Exim Bank threatened Ecuador 's sovereignty.

The deal then nearly fell apart in March when Correa called for a halt to the financing talks and threatened to look elsewhere for partners for the project. But in April, talks were resumed after Exim Bank revised a lot of the terms.

Ecuador 's government and the Export-Import Bank of China signed an agreement on the financing of the project in early June.
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