China Eximbank provides $793.3 million preferential buyer's credit for Abidjan Autonomous Port Expansion and Modernization Project

Project narrative

On December 6, 2014, China Eximbank and the Government of Cote d'Ivoire signed a $793,390,000 (CFA 423,630,219,153.44) preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2014) 43 TOTAL NO. (337)] for the Abidjan Autonomous Port Expansion and Modernization Project. The proceeds of the loan were then on-lent to the Abidjan Autonomous Port Authority (PAA). The borrowing terms of the PBC were as follows: a 20-year maturity, a 7-year grace period, and a 2% interest rate. The borrower was also required to maintain a minimum cash balance of CFA 3 billion in an escrow account (accessible to the lender). The proceeds of the PBC were used to be used by the borrower to finance 85% of the cost of a $933.4 million EPC contract between Abidjan Autonomous Port Authority (PAA) and China Harbour Engineering Co., Ltd. (CHEC), which was signed on January 11, 2013. The Government of Cote d'Ivoire was responsible for financing the remaining 15% of the commercial contract cost ($140,010,000). African Export-Import Bank (Afreximbank) also arranged an EUR 250 million syndicated bridge loan facility in 2014 for this project. According to the Government of Côte d'Ivoire’s Aid Management Platform (AMP), China Eximbank made 15 loan disbursements (worth CFA 459,375,056,353) between 2015 and 2020: a CFA 71,405,100,000 disbursement on September 30, 2015, a CFA 48,843,381,789 disbursement on April 30, 2016, a CFA 5,293,017,891 disbursement on June 30, 2016, a CFA 8,388,694,167 disbursement on October 31, 2016, a CFA 3,281,002,542 disbursement on November 30, 2016, a CFA 50,318,912,478 disbursement on December 31, 2016, a CFA 60,326,378,065 disbursement on December 31, 2017, a CFA 75,857,838,185 disbursement on October 31, 2018, a CFA 24,960,426,152 disbursement on May 31, 2019, a CFA 6,247,765,605 disbursement on September 30, 2019, a CFA 17,886,499,596 disbursement on October 31, 2019, a CFA 12,392,163,528 disbursement on December 31, 2019, a CFA 7,423,281,737 disbursement on March 31, 2020, a CFA 5,517,839,600 disbursement on April 30, 2020, and a CFA 61,232,755,018 disbursement on June 30, 2020. The project involved the enlargement of the Vridi canal (a link from Abidjan to the Atlantic Ocean), the construction of a second container terminal, and a roll-on/roll-off terminal. It was expected to start in the first quarter of 2015 and reach completion by 2021. CHEC was the EPC contractor responsible for implementation. A groundbreaking ceremony took place on October 6, 2015. The roll-on/roll-off terminal was finished at some point in 2018. On February 21, 2019, the enlargement of Vridi Canal was officially completed and handed over to the Government of Cote d'Ivoire. The project as a whole was officially completed on April 23, 2020, and a certificate of final acceptance was issued by the project owner in July 2021. However, the construction of the second container terminal was not completed until November 15, 2022. The modern container terminal, roll-on/roll-off terminal, jetties, and approach channels that were expanded and improved with financing from China Eximbank have reportedly increased the cargo handling capacity and efficiency of the port. This project suffered from major cash flow problems. According to the Government of Côte d'Ivoire’s Aid Management Platform (AMP), PAA had payment arrears to CHEC worth CFA 186 billion (China Eximbank share: CFA 165 billion; PAA share: CFA 21 billion) as of November 14, 2017. The AMP also notes that, as of November 14, 2017, the project was generating large financial outflows but it was not expected to generate revenue until 2020. To increase PAA’s revenue-generation capacity, the Ivorian authorities considered putting in place a special tax and customs regime (in accordance with Articles 4 and 43 of the PAA statutes) from 2020 to 2035. It is unclear if they ultimately did so. The Government of Cote d'Ivoire and PAA also secured an EUR 10,641,840 agreement with Matha Capital, JP Morgan, Société Générale Paris, and Ecobank to hedge its foreign exchange (USD/CFA) risk on its outstanding debt to China Eximbank for the Abidjan Autonomous Port Expansion and Modernization Project.