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Overview

ZTE provides $13.27 million USD supplier's credit loan to Uzbektelecom for supply of equipment for Broadband Expansion Project in 2021

Commitments (Constant USD, 2023)$12,238,093
Commitment Year•2021Country of Activity•UzbekistanDirect Recipient Country of Incorporation•UzbekistanSector•CommunicationsFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
May 15, 2021
Last repayment (originally scheduled)
Oct 20, 2024

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned companies

  • ZTE Corporation (formerly Zhongxing Telecommunication Equipment Corporation)

Receiving agencies

State-owned companies

  • Uzbektelecom JSC

Loan description

ZTE provides $13.27 million USD supplier's credit loan to Uzbektelecom for supply of equipment for Project Expansion of broadband in 2021

Grant element•14.621%Interest rate (t₀)•0%Interest type•Fixed Interest RateMaturity•3.438 years

Narrative

Full Description

Project narrative

On 15 May 2021, Uzbektelecom and ZTE Corporation signed a contract for supply of equipment for Broadband Expansion Project of JSC Uzbektelecom in western region (No S1UZ2020113001PON) in the amount of 13,271,381 US dollars (equivalent to 163,752,518 thousand soums). While 15% of the total amount is paid upfront, 85% of the total amount of the contract is made during two years starting from the date of ending of the grace period, in equal eight payments to be made on each three months with interest rate of 0% with maturity until 20 October 2024. At the date of initial recognition, the loan was recognized at fair value based on expected cash outflows at a market rate observable for similar instruments of 6.7% at the time the loan was issued. On initial recognition of loan total discount in the amount of 1,347,504 US dollars (equivalent to 14,315,133 thousand soums) million was recognized within property and equipment. As of December 2021, the amount outstanding balance is 129,447,650 Uzbekistan Soums; as of December 2022, the amount outstanding balance is 119,313,905,000 Uzbekistan Soums; as of December 2023, the amount outstanding balance is 102,099,467,000 Uzbekistan Soums; As of December 2024, the loan is fully repaid.

Staff comments

1. This loan is interest-free. The 6.7% fair market value is an accounting adjustment mechanism: when the loan was first recorded, auditors had to discount the future payments using the prevailing market rate for similar loans (6.7%) to reflect their fair value. Therefore, the future cash outflows (the 8 payments) were discounted back to their present value at 6.7%. 2. In previous Uzbektelecom financial statements, the date of issue is written as 12/15/2021 and the maturity date is written as 07/22/2024. It is unclear why the terms are written differently. This issue warrants more investigation. 3. In Uzbektelecom's consolidated financial statements starting in 2020 (https://uztelecom.uz/uploads/media/НоваяПапка/Consolidated_financial_statements_of_JSC_Uzbektelecom_2020.pdf) , there is a reference to three new loans committed in 2019. However, the reports do no provide descriptions on these loans. This issue warrants more investigation.