China Eximbank provides $373.8 million preferential buyer’s credit for Velana International Airport Upgrade and Expansion Project (Linked to Record ID#53268, 97753, 97757, 97758)

Project narrative

On September 16, 2014, during Xi Jinping's state visit to the Maldives, the Chinese Government and the Government of the Maldives signed a ‘Preliminary Contract Agreement on the Expansion and Upgrading of Ibrahim Nasir International Airport’. Then, on December 28, 2015, China Eximbank and the Government of the Maldives signed a $373,838,500 preferential buyer's credit (PBC) agreement for the Velana International Airport Upgrade and Expansion Upgrade and Expansion Project. The PBC (loan), which went into effect on August 18, 2016, carried the following borrowing terms: a 20-year maturity, a 5-year grace period, and a 3% interest rate. The loan’s principal was to be repaid by the borrower in thirty equal semiannual installments on January 21 and July 21 of each year and the first repayment was scheduled to commence on the first available payment date falling five years after the date of withdrawal (November 2, 2016). The lender expected the borrower to use the revenues from an Airport Development Fee (ADF) to repay the loan. The Maldives Ministry of Finance and Treasury used the proceeds of the China Eximbank loan to on-lend to Maldives Airports Company Limited (MACL) — a state-owned enterprise in the Maldives — in local currency (Maldivian Rufiyaa). As of December 31, 2018, China Eximbank had disbursed $211,137,789. It made additional disbursements worth $6,255,639 during calendar year 2020 and $38,474,600 during calendar year 2021. China Eximbank had disbursed $335,363,900 as of December 31, 2020 and $373,838,500 as of December 31, 2021. The borrower did not make any repayments to China Eximbank during calendar year 2020 or calendar year 2021. It did make repayments worth $24,922,567 in calendar year 2022 and $24,922,567 in 2023. The loan’s (principal) amount outstanding was $321,953,650 as of December 31, 2019, $335,363,900 as of December 31, 2020, $373,838,500 as of December 31, 2021, $348,915,933 as of December 31, 2022, and $323,993,367 as of December 31, 2023. The total cost of the Velana International Airport Upgrade and Expansion Upgrade and Expansion Project was $800 million and it was reportedly co-financed by the Kuwait Fund for Arab Economic Development, the Saudi Fund for Development, the OPEC Fund for International Development, the Abu Dhabi Fund for Arab Economic Development, and Japan Bank for International Cooperation (JBIC). The purpose of the project was to support the construction of an additional runway and bridge leading to the Velana International Airport (previously known as Ibrahim Nasir International airport) in Malé, Maldives. More specifically, the project involved the construction of a new 3,400 meters long and 65 meters wide runway, reclaiming land, and developing a 45 million liter capacity fuel farm and an 80,000 ton cargo complex. Beijing Urban Construction Group (BUCG) was the contractor responsible for project implementation. It was given the commercial contract to expand the airport after a $511 million deal with India’s GMR Infrastructure was canceled by the Maldivian government. The project's groundbreaking ceremony was on February 27, 2017. The paving of the new runway was completed on August 24, 2018. Then, an A380 airplane landed on the newly constructed runway on September 18, 2018. The Global Times declared this moment as the project’s official completion date. There are some indications that the China Eximbank preferential buyer’s credit (loan) for the Velana International Airport Upgrade and Expansion Upgrade and Expansion Project has financially underperformed vis-a-vis the original expectations of the lender. In May 2020, the China Eximbank loan for the Velana International Airport Upgrade and Expansion Upgrade and Expansion Project was restructured through the G-20 Debt Service Suspension Initiative (DSSI). Debt service payments under the loan were deferred until December 31, 2020 and the outstanding balance of the loan were transferred to a new China Eximbank loan instrument along with the capitalization of accrued interest (as captured via Record ID#97753). Debt service payments under the loan were again deferred from January 1, 2021 to June 30, 2021 and the outstanding balance of the loan was again transferred to a second, new China Eximbank loan instrument along with the capitalization of accrued interest (as captured via Record ID#97757). Debt service payments were deferred yet again under the loan from July 1, 2021 to December 31, 2021 and the outstanding balance of the loan was again transferred to a third, new China Eximbank loan instrument along with the capitalization of accrued interest (as captured via Record ID#97758). The amount outstanding under the first, new China Eximbank loan instrument was $3,288,673 as of December 31, 2021 and $2,192,448 as of December 31, 2022 (after the borrower made a repayment in 2022 worth $1,096,224). The amount outstanding under the second, new China Eximbank loan instrument was $3,403,170 as of December 31, 2021 and $3,062,853 as of December 31, 2022 (after the borrower made a repayment in 2022 worth $340,317). The amount outstanding under the third, new China Eximbank loan instrument was $3,372,270 as of December 31, 2021 and $3,372,270 as of December 31, 2022.