China Eximbank provides $1.098 billion buyer’s credit loan for Khartoum-Port Sudan Railway Construction Project

Project narrative

In 2007, China Eximbank and the Government of Sudan signed a $1,098,132,680 buyer’s credit loan (BCL) agreement for the Khartoum-Port Sudan Railway Construction Project. The BCL carried the following borrowing terms: a 19.5-year repayment period, a 4% interest rate, and an unknown grace period. The proceeds of the BCL were used to partially finance the $1.154 billion commercial contract signed on February 28, 2007 with China Railway Engineering Group Co. Ltd. and China Railway Erju Co. Ltd. Unit Transtech Engineering Corporation. The project involved constructing a 762 km railway line from Port Sudan to Khartoum via Atbara. It also involved the provision of electric multiple units (EMUs) from CSR Ziyang Locomotive Co., Ltd. and Shanghai Electric Company. A groundbreaking ceremony for the Atbara to Port Sudan portion of the railway was held on February 20, 2013, and a formal project handover ceremony for the Khartoum to Atbara portion of the railway was held on January 20, 2014. There are some indications that the China Eximbank loan issued for the Khartoum-Port Sudan Railway Construction Project may have underperformed vis-a-vis lender expectations. In August 2010, the Economic and Commercial Counsellor's Office of the Chinese Embassy in Sudan reported that the Khartoum-Port Sudan Railway Construction Project had been stagnant due to the Government of Sudan's inability to make loan repayments. Then, according to Sudan’s Finance Minister Ali Mahmood Abdel-Rasool, China Eximbank suspended its financing for 11 projects in Sudan following the secession of South Sudan in July 2011, which triggered a major loss of oil revenue (a key source of collateral for China Eximbank loans). Ali Mahmood Abdel-Rasool said at the time that the Government of Sudan had previously pledged oil revenues (worth 120,000 barrels per day) to China Eximbank as a source of collateral. Then, on February 18, 2012, the Chinese Government announced that it had agreed to reschedule the outstanding debt obligations of the Government of Sudan by extending loan repayment periods by 5 years (as captured via Record ID#30421). According to the External Debt Unit of the Central Bank of Sudan, the Government of Sudan's total arrears to Chinese creditors amounted to $3.864 billion ($2.608 billion in principal, $1.129 billion in interest, and $127 million in penalty interest) as of March 31, 2022.