China Eximbank provides $1 billion loan for Dolisie-Brazzavile Section of Pointe-Noire-Brazzaville Road (RN1) Construction Project (Linked to Project ID#59273, ID#68874, ID#60219, ID#72780, ID#72781, ID#72782)

In 2012, China Eximbank and the Republic of Congo signed a $1 billion loan framework agreement (captured in Project ID#59273) — also known in the Republic of Congo as the “strategic partnership 2” (“partenariat stratégique 2”) — that allowed the Republic of Congo to obtain China Eximbank loans for infrastructure projects through a securitization mechanism: Société Nationales des Pétroles Congolais (SNPC)—the country’s state-owned oil company—agreed to deposit a portion of the cash proceeds from its oil exports into an escrow account that is controlled by China Eximbank. The borrower was required to keep a minimum deposit balance of 15-20% of total outstanding loans in an escrow account. All subsidiary loans approved through this framework agreement were to carry the following terms: a 5-year grace period, a 20-year maturity and a 0.25% interest rate. According to the Congolese authorities, only one subsidiary loan was ultimately approved through this framework agreement: a $1 billion loan in 2012 for the Dolisie-Brazzavile Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Project ID#369). The loan’s (principal) amount outstanding was $1,000,000,000 as of December 31, 2019. This project, which is also known as Phase 2 of the Pointe-Noire-Brazzaville Road (RN1) Construction Project, involved the construction of a 376 km road segment along National Route 1 (NR1) between Dolisie and PK45 north of Brazzaville. China Eximbank also issued multiple loans for Phase 1 of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Project ID#68874, ID#72780, ID#72781, and ID#72782). China State Construction Engineering Corporation Ltd. (CSCEC) was the contractor responsible for the implementation of Phase 1 and Phase 2. The groundbreaking ceremony for Phase 2 took place on December 22, 2011. Phase 2 was completed on October 3, 2015. The four-lane, 535 km Pointe-Noire-Brazzaville Road (RN1) was officially inaugurated on March 1, 2016. The $1 billion China Eximbank loan that supported Phase 2 was rescheduled on April 29, 2019. Under the terms of the debt rescheduling agreement, the Republic of Congo agreed to repay 33% of its its outstanding obligations for the Phase 2 (375 km Dolisie-Brazzaville Section) of National Route 1 (RN1) Construction Project within 3 years (more specifically, by December 31, 2021). For the remaining 67% of its outstanding obligations, the Republic of Congo agreed to a new repayment schedule that involved extending the maturity the loan by 15 years (from 20 years to 35 years) and resetting the interest rate of the loan from 0.25% to to 2%. This debt rescheduling is captured in Project ID#58340. Around the time of the rescheduling, the Republic of Congo was facing a balance of payment crisis and it decided to concession the RN1 through a toll-operate-transfer (TOT) privatization. The concession was won by La Congolaise des Routes S.A. (LCR), a joint venture between CSCEC (70% ownership stake), Egis Projects (15% ownership stake) and the Congolese Government (15% ownership stake). As of March 2019, LCR operated the RN1 through a 30-year franchise agreement. According to Li Jiqin, Chairman of CSCEC International, CSCEC reached out to the Republic of Congo for this deal because the NR1 was left unmaintained after its construction was completed in 2016. Under this new agreement, CSCEC is responsible for maintaining the road while the French company, Egis, is responsible for managing toll collection. The CSCEC’s upfront equity investment in this public-private partnership (PPP) helped the Republic of Congo address its balance of payments crisis. The Republic of Congo also tried to convince the CSCEC to invest in a similar TOT privatization of National Route 2 (which was also constructed with financial support from China Eximbank), but the company declined as it believed the deal would not generate enough profit.

Additional details

1. This project is also known as Phase 2 of the Pointe-Noire-Brazzaville Road (RN1) Construction Project. The French project title is Route nationale n°1 Dolisie-Brazzaville or Travaux d’aménagement et bitumage de RN1 Dolisie Brazzaville. The Chinese project title is 国家1号公路全. 2. The Congolese authorities disclosed the receipt of a $1 billion China Eximbank loan (under the “strategic partnership 2” or “partenariat stratégique 2”) to the World Bank and the World Bank identified this loan in its September 2014 Republic of Congo Economic Update publication. 3. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it identifies a $1.208 billion China Eximbank loan for the Dolisie-Brazzavile Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project. However, AidData has not identified any official sources that confirm the provision of a $1.208 billion China Eximbank loan.

Number of official sources

21

Number of total sources

35