China Eximbank provides $168.3 million preferential buyer's credit for Phase 1 of National Broadband Network Project (Linked to Record ID#58397)

Project narrative

On July 19, 2012, China Eximbank and Cameroon's Ministry of Economy, Planning, and Regional Development (MINEPAT) signed a preferential buyer credit (PBC) loan agreement [CHINA EXIMBANK PBC NO. (2012) 33 TOTAL NO.(221)] worth $168,300,000 (CFA 99 billion) for the National Broadband Network Project (Projet National Broadband Network). The terms of the loan were as follows: a 20 year maturity, a 5 year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0.30% commitment fee, and a 0.30% management fee. The proceeds of the loan were on-lent to Cameroon Telecommunications Co. (CAMTEL) to finance 85% of the cost of $198,000,000 commercial contract with Huawei Technologies Co., Ltd., which was signed on December 31, 2010. The remaining 15% was to be financed by the Government of Cameroon (as a down payment). However, due to a lack of sufficient government funding, Huawei Technologies Co., Ltd. helped MINEPAT secure a second loan worth $29.7 million from Standard Chartered Bank to cover the remaining 15% of the commercial contract cost. As of December 31, 2020, the loan had achieved a 100% disbursement rate and its outstanding amount was equivalent to CFA 78.5 billion. Its outstanding amount was equivalent to CFA 105 billion as of December 31, 2016, CFA 92 billion as of December 31, 2017, CFA 90 billion as of December 31, 2018, and CFA 88 billion as of December 31, 2019. This project had fiber-to-the-home, submarine cable, 4th generation mobile broadband (LTE), security surveillance network, and digital TV installation components. Huawei Technologies was the contractor responsible for project implementation. The implementation of the project commenced on January 1, 2012 and reached completion on February 18, 2016. There are some indications that the China Eximbank loan for Phase 1 of National Broadband Network Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements. Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213). Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed). Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress. Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project. He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding. He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’