China Eximbank provides RMB 381.6 million government concessional loan for Chókwe Agro-Processing Complex Project

Project narrative

On July 23, 2012, China Eximbank and the Government of Mozambique signed an RMB 381,600,000 government concessional loan (GCL) agreement for the Chókwe Agro-Processing Complex Project. The Government of Mozambique on-lent the GCL proceeds to Empresa Hidráulica de Chókwe E.P (a state-owned company in Mozambique). The loan carries a 20 year maturity, a 7 year grace period, and an unknown interest rate. Its first scheduled principal payment date is March 21, 2020 and its last scheduled principal payment (maturity) date was September 21, 2032. The loan's (principal) amount outstanding was $42,549,206 as of December 31, 2022. The project involved the construction of a large agro-industrial complex in the town of Chókwe to store and preserve agricultural produce. More specifically, it involved the development rice farming and livestock breeding, the rehabilitation of irrigation systems, and the establishment of modern processing facilities. Upon completion, it was envisaged that the agro-processing complex in Chókwe would process 20,000 tons of rice per year, and preserve over 800 tons of horticultural products per year. Beijing Urban Construction Group (BUCG) and China CAMC Engineering Co., Ltd. were the contractors responsible for implementation and their work was undertaken in partnership with Mozambique’s Instituto de Gestão e Participação do Estado (Igepe). A groundbreaking ceremony took place on May 24, 2013. However, construction did not begin until in December 2013. Construction ended in September 2014 and the project was officially completed and handed over to the authorities on April 13, 2015. There are some indications that the China Eximbank loan for the Chókwe Agro-Processing Complex 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 Record ID#66283).