China Eximbank provides RMB 541.9 million government concessional loan for Rehabilitation and Extension of Port Luganville Main Wharf Project

Project narrative

On November 22, 2014, the Government of the People's Republic of China and the Government of the Republic of Vanuatu entered into a Framework Agreement on Provision of Government Interest-Subsidized Concessional Loans by China to the Republic of Vanuatu. On the same day (November 22, 2014), China Eximbank and the Government of the Republic of Vanuatu (represented by the Ministry of Finance and Economic Management) signed an RMB 541,900,000 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. 2014 (23) TOTAL NO. (526)] for the Vanuatu Rehabilitation and Extension of Port Luganville Main Wharf Project. The borrowing terms of the GCL were as follows: a 2% interest rate, a 0% default (penalty) interest rate, a 20-year maturity, a 5-year grace period, a 0.25% management fee, and a 0.25% commitment fee. The borrower was to use the proceeds of the GCL to finance a commercial contract between the Ministry of Infrastructure and Utilities of the Republic of Vanuatu and Shanghai Construction Group (SCG) Co., Ltd, which was signed on December 24, 2013. The purpose of the project was to extend and rehabilitate the main wharf in Port Luganville. Prior to the implementation of the project, the main wharf — measuring 270 meters in length — could handle close to 100,000 tons of freight annually. However, it was insufficient for providing full service for all cargo served and tourist boat arrivals due to wharf berth space availability. In addition, new businesses that require the ability to transfer certain heavy cargo off large vessels and into trucks could not be served, due to the physical conditions of the wharf. A key objective of the project was to lengthen the existing wharf (east towards Samanson wharf) and thereby establish a berth with a total length of 361 meters. The main wharf at Port Luganville is accessible to existing tarsal roads and located around 1 kilometer from Luganville town. Copra, Cocoa, Kava, Coconut oil and coconut mills are the primary commodities received and shipped at the port, but it also provides specialty services on-demand to local business located within Sanma Province and other customers. Upon completion, the project was expected to give the main wharf in Port Luganville the capacity to dock two DWT freighters or 1 GT cruise. It was also expected to generate a 15% increase in outbound and inbound traffic. SCG was the contractor responsible for implementation. The originally expected project implementation period was June 2014-June 2017. A groundbreaking ceremony took place on February 9, 2015. However, construction did not begin until July 28, 2015. The final handover ceremony for the project was conducted on August 19, 2017, and the Luganville Wharf went into operation by the 2017. The project reportedly resulted in an increase of tourism and a boost to the local economy.