China Eximbank provides $90 million buyer’s credit loan for 185 km El Dibeibat-El Fula Road Construction Project (Linked to Record ID#57039, #54079)

Project narrative

On July 2008, 29, China Eximbank and the Government of Sudan signed a $3 billion oil-backed master framework agreement (or line of credit) to finance various infrastructure projects (captured via Record ID#57039). This resources-credit cooperation package is backed by future revenues from the sale of oil exports. Each subsidiary buyer’s credit loan (BCL) issued through the framework agreement carries a 15-year maturity and 5.6% interest rate. One of the subsidiary loans approved through this agreement in 2009 was a $90 million BCL for the 185 km El Dibeibat-El Fula Road Construction Project. The proceeds from this BCL were used to partially finance a $100 million commercial contract signed in 2009 with Chongqing International Construction Corporation. The project involved the construction of a 185 km road from El Dibeibat (or al-Dibaibat) in South Kordofan State to EI Fula (or al-Fula or الفولة) in West Kordofan State. The road starts in El Dibeibat in central Sudan and it runs southwest to the town of El Fula in Southern Sudan. The road passes through the small towns of Abu Dhabad and Abuku. It is an important transportation route between southern Sudan and the city of El-Obeid in central Sudan within North Kordofan State. Construction commenced on January 7, 2010, but the project was implemented on a 'stop and go, stop and go' basis due to insecurity and continuing conflict in the area. The project was officially handed over to the Sudanese authorities at the end of the defect liability period on June 19, 2017. The completion of this project has reportedly reduced travel times in southern Sudan and central Sudan and promoted industry alongside the road. There are some indications that the China Eximbank loan issued for the El Dibeibat-El Fula Road Construction Project may have underperformed vis-a-vis lender expectations. 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.