China Eximbank provides RMB 1.04 billion government concessional loan for Remote Sensing Satellite System (RSSS) Project

Project narrative

On May 16, 2017, China Eximbank and the Government of Pakistan signed an RMB 1,040,400,000 governmental concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2017) 08 TOTAL NO. (613)] for the Remote Sensing Satellite System (RSSS) Project. The GCL carries a 2% interest rate. The other borrowing terms of the GCL are unknown. The proceeds of the loan were on-lent from the Government of Pakistan to the National Space Agency of Pakistan (SUPARCO) at a 12% interest rate. As of June 30, 2017, no disbursements had been made through the GCL. The 1,200 kg Pakistan Remote Sensing Satellite (PRSS-1), also called Remote Sensing Satellite System (RSSS), will operate at an altitude of 640 kilometers and will enable Pakistan to meet its imagery requirements in the areas of land mapping, agriculture classification and assessment, urban and rural planning, environmental monitoring, natural disaster management and water resource management for socio-economic development. It will also reportedly be used to provide remote sensing information for CPEC and Belt and Road projects in the region. The project contract was signed by China Great Wall Industry Group Co., Ltd. ('Great Wall Company') of China Aerospace Science and Technology Corporation Limited and the Pakistan Space and Outer Atmosphere Research Committee (SUPARCO) on April 20, 2016. According to the contract, China Great Wall Company was to provide a remote sensing satellite to Pakistan in the form of on-orbit delivery, along with a ground application system, ground monitoring and control system, as well as on-orbit testing, on-site support, training, insurance and related technical support services. The PRSS-1 satellite was successfully launched from the Jiuquan Satellite Launch Centre, China, on July 9, 2018. After successful tests in the orbit, PRSS-1 became fully operational on August 14, 2018. The control of PRSS-1 Satellite was successfully transferred to ground control stations in Pakistan, according to a statement issued by the Pakistan’s Planning Commission. There are some indications that the China Eximbank loan for the RSSS Project financially underperformed vis-a-vis the original expectations of the lender. In 2020, reports emerged that SUPARCO was unable to repay the China Eximbank loan 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 the Prime Minister 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 loan at a 2% rather than a 12% interest rate. Also, 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 agreement for the RSSS 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 agreement for the RSSS 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 agreement for the RSSS Project. The debt service suspension (rescheduling) from July 2020-December 2020 is captured via Record ID#96254. The debt service suspension (rescheduling) from January 2021-June 2021 is captured via Record ID#96256. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Record ID#96253.