China Eximbank provides RMB 136 million government concessional loan for National Broadband Highway Project (Linked to Record ID#96220, 96219)

Project narrative

In April 2011, the Chinese Government and the Government of Samoa’s signed an MOU for the National Broadband Highway Project. On January 5, 2012, Chinese Ambassador Zhao Weiping and Samoan Prime Minister Tuilaepa signed a preferential loan framework agreement for the National Broadband Highway Project. China Eximbank subsequently approved an RMB 136,000,000 ($20,400,000) government concessional loan for the National Broadband Highway Project, which carries the following borrowing terms: a 2% interest rate, a 20 year maturity, a 5 year grace period, a 0.75% commitment fee, and a 0.1% management fee. The first loan disbursement took place in December 2012. Additional disbursements took place in late 2013 and the first half of 2014. The borrower made no principal repayments between July 1, 2016 and June 30, 2017, principal repayments worth WST 3,371,005 between July 1, 2017 and June 30, 2018, principal repayments worth WST 3,348,484 between July 1, 2018 and June 30, 209, principal repayments worth WST 3,394,994 between July 1, 2019 and June 30, 2020, and no principal repayments between July 1, 2020 and June 30, 2021. The loan's amount outstanding was WST 10,548,189 as of June 30, 2013, WST 50,758,205 as of June 30, 2014, WST 57,699,498 as of June 30, 2015, WST 52,740,947 as of June 30, 2016, WST 49,884,845 as of June 30, 2017, WST 49,506,550 as of June 30, 2018, WST 44,983,111 as of June 30, 2019, WST 41,196,236 as of June 30, 2020 and WST 39,708,794 as of June 30, 2021. The purpose of the project was to establish a government intranet and thereby provide national high-speed broadband connections for all government ministries and cooperation, including schools, hospitals, and emergency services. The intranet sought to connect the provinces of Upolu and Savaii with the capital of Apia. The network was expected to rely predominantly on existing Samoa Tel infrastructure, with fiber transmission throughout Upolu and microwave transmission throughout Savaii. The network was designed to provide the government with a means of communicating with the citizens of Samoa using the full suite of voice, image and multimedia services, as well as allowing it to store and exchange information securely. Huawei Technologies Co., Ltd. was the contractor responsible for implementation. The project was officially completed and handed over to the local authorities on June 26, 2014. The project connected 66 ministries, corporations and their centers to a Data Center next to the National Kidney Foundation in the capital city of Apia. According to the Asian Development Bank, the broadband network is underutilized and the government has not allocated an appropriate maintenance budget. According to a December 2023 report published by the World Bank, '[t]he Samoa National Broadband Highway (SNBH), [the Government of Samoa's] intranet used by around 27 government ministries and agencies, schools and hospitals, and the government datacenter have reached their capacity and need to be replaced. Since launching in 2014 , SNBH has been serving as a critical infrastructure enabling the various agencies of government to connect to a central, “closed” network. The SNBH equipment is already at its end of life and needs to be replaced. To the extent that the SNBH implementation stimulated private sector investment in the sector, the SNBH intervention can be seen to have performed a valuable role and delivered material gains. Furthermore, the [the Government of Samoa's] datacenter, which is expected to host the digital ID system has also exceeded its capacity and has frequent electricity outages, resulting in services being impacted.' There are some indications that the China Eximbank loan for the National Broadband Highway Project has financially underperformed vis-a-vis the original expectations of the lender. In 2020, as part of G20's Debt Service Suspension Initiative (DSSI), China Eximbank and the Government of Samoa signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple loan agreements, including the loan agreement for the National Broadband Highway Project. The total estimated suspension amount is $21,906,085. Then, in 2021, China Eximbank and the Government of Samoa signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due in 2021 under multiple loan agreements, including the loan agreement for the National Broadband Highway Project. The total estimated suspension amount was $16,436,000 ($13,506,000 in principal payments and $2,929,000 in interest payments). The 2020 debt rescheduling is captured via Record ID#96220. The 2021 debt rescheduling is captured via Record ID#96219.