China Eximbank provides RMB 86.5 million government concessional loan (GCL) for Paksat-1R Ground Control Station Project (Linked to Project ID#43298 and #72713)

In October 2008, a contract for the construction and launch of Paksat-1R, a DFH-4-type satellite, was signed between Pakistan's Space and Upper Atmosphere Research Commission (SUPARCO) and China Great Wall Industry Corporation (CGWIC). The communication satellite was to be constructed with 30 year transponders, 12 in C-Band and 18 in Ku-Band, each of 36 MHz Bandwidth. Then, in September 2009, China Eximbank and the Government of Pakistan signed a framework agreement (captured via Project ID#72713). Under the terms of the framework agreement, China Eximbank agreed to provide up to RMB 1.385 billion for the Paksat-1R Project. Any subsidiary loans under this framework agreement would bear the following terms: a 2% interest rate, a 20 year maturity, a 5 year grace period, a 0.2% commitment fee, and a 0.2% management fee. Shortly thereafter, on October 15, 2009, Deputy Director of the China Eximbank and the Pakistani Ambassador to China signed a RMB 1,350,000,000 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2009) 16 TOTAL NO. (267)] for the Paksat-1R Satellite System Project (captured via Project ID#43298). China Eximbank and the Government of Pakistan also signed an RMB 86.5 million government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2010) 33 TOTAL NO. (330)] for the construction of a ground control facility on October 27, 2010 (as captured via Project ID#36953). The proceeds of the GCLs were on-lent from the Government of Pakistan to the National Space Agency of Pakistan (SUPARCO) at a 15% interest rate. Paksat-1R, a DFH-4-type satellite, was constructed by the Pakistan Space and Upper Atmosphere Research Commission (SUPARCO) and the China Great Wall Industry Corporation (CGWIC). On August 12, 2011, at the Chinese Xichang Satellite Launch Center, Pakistan’s first Communications Satellite PAKSAT-1R, as part of Pakistan’s Space Programme 2040, was launched. The launch was witnessed by Pakistani Secretary Defence Lt Gen Syed Athar Ali (R), Secretary Foreign Affairs, Salman Bashir, Director General, Strategic Plans Division Lt Gen Khalid Ahmed Kidwai (R) and Ambassador of Pakistan to China, Muhammad Masood Khan. Launched on the Long March 3B rocket, the Paksat-1R satellite has a design life of 15 years with initial goals to provide broadband internet access, digital television broadcasting, remote and rural telephony, emergency communications, tele-education and tele-medicine services across South and Central Asia, Eastern Europe, East Africa and the Far East. The satellite successfully took over the operations of its predecessor, the PakSat-1E satellite leased by Pakistan, in geostationary orbit at 38° East. The commercial services of the satellite were inaugurated by the Prime Minister of Pakistan on November 5, 2011 from the satellite ground station located near Lahore. On November 11, 2011, the ground control center was transferred to the Pakistani side for its use. There are some indications that the China Eximbank government concessional loans for the Paksat-1R Satellite System Project financially underperformed vis-a-vis the original expectations of the lender. in 2020, reports emerged SUPARCO was unable to repay the China Eximbank loans for the RSSS Project. SUPARCO sought relief from a panel consisting of the Federal Minister of Planning, Development & Special Initiatives, the Federal Minister for Industries & Production, and the Advisor to PM on Finance and Revenue on October 12, 2020. The panel viewed SUPARCO’s case favorably and recommended that it be approved by the Economic Coordination Committee (ECC). At that time, it was proposed that SUPARCO be allowed to repay the loans at a 2% rather than a 15% interest rate. Then, on or around July 1, 2020, China Eximbank and the Government of Pakistan signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2020 and December 31, 2020 under the government concessional loan agreements for the Paksat-1R Satellite System Project. Then, on November 19, 2020, China Eximbank and the Government of Pakistan signed another debt suspension agreement [No. DSSI2021PHASE1-030]. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between January 1, 2021 and June 30, 2021 under the government concessional loan agreements for the Paksat-1R Satellite System Project. Then, on or around July 1, 2021, China Eximbank and the Government of Pakistan signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the government concessional loan agreements for the Paksat-1R Satellite System Project. The debt service suspension (rescheduling) from July 2020-December 2020 is captured via Project ID#96254. The debt service suspension (rescheduling) from January 2021-June 2021 is captured via Project ID#96256. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Project ID#96253.

Additional details

1. The November 2020 debt suspension agreement [No. DSSI2021PHASE1-030] can be accessed in it entirety via https://www.dropbox.com/s/67n1oq44it27kvu/3.%20Debt%20Suspension%20Agreement%20for%20GCL%20Other%20Projects.pdf?dl=0

Number of official sources

9

Number of total sources

31