Project ID: 35170

China Eximbank provides $155.5 million preferential buyer's credit for Construction of National Emergency Telecommunications System Project

Commitment amount

$ 175466085.69312885

Adjusted commitment amount

$ 175466085.69

Constant 2021 USD

Summary

Funding agency [Type]

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

Recipient

Cameroon

Sector

Communications (Code: 220)

Flow type

Loan

Level of public liability

Central government debt

Financial distress

Yes

Infrastructure

Yes

Category

Intent

Mixed (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-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

Implementation (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2013-10-29

Actual start

2013-10-01

Description

On October 29, 2013, China Eximbank and Cameroon's Ministry of Economy, Planning, and Regional Development (MINEPAT) signed a preferential buyer credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2013) 39 TOTAL NO. (283)] worth $155,550,000 for the National Emergency Telecommunications System Project. The PBC (loan) carried the following borrowing terms: a maturity of 20 years, a grace period of 5 years, an interest rate of 2%, a default (penalty) interest rate of 0%, a commitment fee of 0.25%, and a management fee of 0.25%. The borrower was expected to use the proceeds of the PBC to finance 85% of the cost of a $183,000,000 commercial contract between Cameroon’s Ministry of Posts and Telecommunications of Cameroon and ZTE Corporation, which was signed on December 21, 2012. As of December 31, 2020, the loan (PBC) had achieved a 95.8% disbursement rate (with an undisbursed balance of CFA 3.5 billion) and its outstanding amount was equivalent to CFA 77.5 billion. The purpose of the project was to construct a national network of emergency telecommunications systems to transmit sensitive public administration and national security security information for military, police, civil defense, and emergency response institutions. ZTE Corporation was the contractor responsible for project implementation. The implementation of the project commenced on October 1, 2013. Then, in May 2017, the Chinese Embassy in Cameroon published a speech by Chinese Ambassador Wei Wenhua in which he referenced the National Emergency Telecommunications System Project in a list of projects that were underway. It is unclear whether or when the project reached completion. There are some indications that the China Eximbank loan for the Construction of National Emergency Telecommunications System 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 Project 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.’

Additional details

1. The French project title is Projet de construction d'un réseau national de télécommunications d'urgence. 2. The loan agreement can be accessed in its entirety via SourceID#68604 or https://www.documentcloud.org/documents/20485906-cmr_2013_180. 3. The project ID number for this transaction in Cameroon's Development Assistance Database (DAD) is CAM/000847.

Number of official sources

7

Number of total sources

10

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Details

Cofinanced

No

Direct receiving agencies [Type]

Cameroon Ministry of Economy, Planning, and Regional Development (MINEPAT) [Government Agency]

Implementing agencies [Type]

Government of Cameroon [Government Agency]

Cameroon Ministry of Posts and Telecommunications [Government Agency]

ZTE Corporation [State-owned Company]

Loan Details

Maturity

20 years

Interest rate

2.0%

Grace period

5 years

Grant element (OECD Grant-Equiv)

39.0747%

Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit