Project ID: 31066

China Eximbank provides RMB 656 million government concessional loan for Beira-Machipanda (N6) Road Rehabilitation Project (Linked to Project ID#57336)

Commitment amount

$ 120349600.21293741

Adjusted commitment amount

$ 120349600.21

Constant 2021 USD

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Mozambique

Sector

Transport and storage (Code: 210)

Flow type

Loan

Level of public liability

Central government debt

Financial distress

Yes

Infrastructure

Yes

Category

Intent

Development (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

ODA-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2013-11-15

Actual start

2015-04-01

Planned complete

2018-03-31

Actual complete

2019-11-14

NOTE: Red circles denote delays between planned and actual dates

Geography

Description

On November 15, 2013, China Eximbank and the Government of Mozambique signed a government concessional loan (GCL) agreement worth RMB 656,000,000 for the Beira-Machipanda (N6) Road Rehabilitation Project. This GCL carried the following borrowing terms: a 21 year maturity, a 7 year grace period, and and 1% interest rate. Then, on January 13, 2014, China Eximbank and the Government of Mozambique signed a preferential buyer’s credit (PBC) agreement worth $312,400,000 for the Beira-Machipanda (N6) Road Rehabilitation Project. This PBC carried the following borrowing terms: a 20 year maturity, a 7 year grace period, and a 1.5% interest rate. Project ID#31066 captures the GCL and Project ID#57336 captures the PBC. The proceeds of the GCL and the PBC were to be used by the borrower to finance a commercial contract between Anhui Foreign Economic Construction Group Co., Ltd. (AFECC) and Mozambique's National Roads Administration, which was signed on March 27, 2012. The $416.5 million project involved the upgrading and rehabilitation of an 288 km road from Beira to Machipanda and a bridge that was constructed over the River Pungue. The completion of the project was expected to shorten the journey from the western border of Mozambique to the port of Beira from 7 hours to 4 hours, thereby facilitating regional connectivity, stimulating the development of agriculture, tourism and other industries along the route, and promoting exports. AFECC was the contractor responsible for implementation. A formal groundbreaking ceremony was held on July 10, 2014. However, construction did not begin until April 1, 2015. The project was originally scheduled for completion on March 31, 2018. However, it was ultimately completed and National Highway No. 6 was opened to traffic on November 14, 2019. The collection of tolls commenced on January 1, 2020. There are some indications that the China Eximbank loan for the Beira-Machipanda (N6) Road Rehabilitation Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond. Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government. Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Project ID#66283).

Additional details

1. The Portuguese project title is Reabilitação da Estrada N6: Beira-Machipanda. The Chinese project title is 莫国家6号公路改扩建项目 or 莫桑比克交通干线N6公路改扩建项目 or 莫桑比克6号国道(EN6)项目. 2. In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI does not record the terms (20 year maturity, 7 year grace period, and 2% interest rate) of this loan.

Number of official sources

12

Number of total sources

28

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Details

Cofinanced

No

Direct receiving agencies [Type]

Government of Mozambique [Government Agency]

Implementing agencies [Type]

Anhui Foreign Economic Construction Group Co., Ltd. (AFECC) [Private Sector]

Loan Details

Maturity

21 years

Interest rate

1.0%

Grace period

7 years

Grant element (OECD Grant-Equiv)

60.3602%

Bilateral loan

Government Concessional Loan

Investment project loan