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Overview

China Eximbank provides $84 million loan for Phase 1 (Obouya-Boundji-Okoyo Section) of Obouya-Gabon Border Road (RN3) Construction Project (Linked to Record ID#68956 and #60219)

Commitments (Constant USD, 2023)$139,571,421
Commitment Year•2007Country of Activity•CongoDirect Recipient Country of Incorporation•CongoSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2007
Start (actual)
Jun 15, 2008
End (planned)
Dec 1, 2010
End (actual)
Oct 23, 2013
First repayment (originally scheduled)
Dec 31, 2011
Last repayment (originally scheduled)
Dec 27, 2026

Geospatial footprint

Map overview

Visualizes the AidData-provided feature geometry for this project.

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This project involved the construction of 116.575 km segment of the border road from Obouya to Okoyo via Boundji. More detailed locational information can be found at https://www.openstreetmap.org/directions?engine=fossgis_osrm_car&route=-1.4660%2C15.0749%3B-0.9287%2C15.7218#map=12/-0.9530/15.6011.

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 Policy Banks

  • Export-Import Bank of China (China Eximbank)

Receiving agencies

Government Agencies

  • Government of Republic of Congo

Implementing agencies

State-owned companies

  • China Machinery Engineering Corporation (CMEC)

Collateral providers

State-owned companies

  • Société Nationales des Pétroles Congolais (SNPC)

Loan description

China Eximbank provides $84 million loan for Phase 1 (Obouya-Boundji-Okoyo Section) of Obouya-Gabon Border Road (RN3) Construction Project

Grace period•5 yearsGrant element•65.0736%Interest rate (t₀)•0.25%Interest type•Fixed Interest RateMaturity•20 years

Collateral

This China Eximbank loan -- and other subsidiary China Eximbank loans approved under a June 19, 2006 framework agreement that was renewed/extended in 2012 -- was collateralized against cash proceeds from SNPC oil export sales to Chinese importers (through an offtake agreement), which were deposited in a China Eximbank-controlled escrow account. The Republic of Congo was required to maintain a minimum cash balance in the escrow account equivalent to approximately 20% of its total outstanding debt to China Eximbank. The cash balance in the China Eximbank-controlled escrow account was $534,238,226 (CFA 272,846,414,000) in 2011, an unknown amount in 2012, an unknown amount in 2013, an unknown amount in 2014, an unknown amount in 2015 (equivalent to 26% of SNPC oil sales in 2015), $281,560,937 in 2016 (equivalent to 7,558,672 barrels of oil or 32% of SNPC oil sales in 2016), $338,285,020 in 2017 (equivalent to 23.25% of SNPC oil sales in 2017), $513,780,005 in 2018 (equivalent to 7,411,386 barrels of oil, eight oil cargoes, or 30.22% of SNPC oil sales in 2018), $523,547,187 in 2019 (equivalent to 8,228,065 barrels of oil, 9 oil cargoes, or 32.56% of SNPC oil sales in 2019), $266,659,781 in 2020 (equivalent to 6,349,813 barrels of oil, 7 oil cargoes, or 31.61% of SNPC oil sales in 2020), $319,164,228 in 2021 (equivalent to 4,585,056 barrels of oil or 21.4% of SNPC oil sales in 2021), and $356,343,684 in 2022 (equivalent to 3,634,514 barrels of oil 13.09% of SNPC oil sales in 2022).

Narrative

Full Description

Project narrative

On June 19, 2006, China Eximbank and the Republic of Congo signed a $1.6 billion loan framework agreement — also known in the Republic of Congo as the “strategic partnership” (“partenariat stratégique”) — 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. This framework agreement (captured in Record ID#60219) was ratified on October 26, 2006. One of the subsidiary loans that was approved through the framework agreement included a loan in 2007 for Phase 1 (Obouya-Boundji-Okoyo Section) of the Obouya-Gabon Border Road (RN3) Construction Project. This loan carried the following borrowing terms: 0.25% interest rate, 20-year maturity, and a 5-year grace period. As of 2014, USD 84 million had been disbursed. Its (principal) amount outstanding was unknown as of December 31, 2019. The Obouya-Gabon Border Road (RN3) Construction Project supported the development of a 207 km road corridor. The road connects National Route 2 (RN2) with the Gabon border, and its construction included small bridges, drainage infrastructure, schools, and medical centers for major villages along the road, and a gas station at 100km intervals. This project was implemented in two phases and supported by two different China Eximbank loans. Phase 1 (captured via Record ID#14829) supported the construction of 116.575 km segment of the border road from Obouya to Okoyo via Boundji. A formal project commencement ceremony took place on February 25, 2008. However, a project start order was not issued until June 15, 2008. The project achieved temporary acceptance on November 2, 2011. On the very next day (November 3, 2011), a project completion (inauguration) ceremony took place. However, the contractor responsible for implementation later reported that Phase 1 was not completed until October 23, 2013. Phase 2 (captured via Record ID#68956) involved the construction of a 90 km segment of the border road from Okoyo to the country’s border with Gabon via Lékéty. A foundation laying ceremony for Phase 2 took place on November 3, 2011 and this road segment opened to traffic on December 14, 2015. China Machinery Engineering Corporation (CMEC) was the contractor responsible for the implementation of both phases.

Staff comments

1. Phase 1 is also known as the Obouya-Boundji-Okoyo (OBO) Road Project or the Obouya-Boundji-Okoyo (OBO) Section of the National Route 3 (RN3) Construction Project. The Chinese project title for Phase 1 is 刚奥布亚加蓬边境公路一期工程 or 欧布亚－布昂吉－欧克依欧公路项目 or 中机总公司3号路 or 奥约-布恩吉-奥科约（3号）公路. The Obouya-Gabon Border Road Project is also known as Obouya-Okoyo-Lékéty-Gabon Border Road Project. 2. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it identifies a $106 million China Eximbank loan for Phase 1 (Obouya-Boundji-Okoyo Section) of the Obouya-Gabon Border Road Construction Project. For the time being, AidData records the face value of the loan ($84 million) that the Congolese authorities disclosed to the World Bank and the World Bank reported in its September 2014 Republic of Congo Economic Update publication. However, there is evidence that the value of the commercial contract for Phase 1 increased by nearly 25% (to $125 million) due to implementation difficulties. Further investigation is needed to determine if the face value of China Eximbank loan that supported Phase 1 was amended to help finance the increase in the value of the commercial contract with CMEC.