China Eximbank provides $492.4 million preferential buyer’s credit for 508 km Rurrenabaque-Riberalta Highway Project

On June 30, 2015, the Government of Bolivia approved a $492,400,000 preferential buyer’s credit (PBC) [China Eximbank PBC 2015 (08) 350] from China Eximbank for the Rurrenabaque-Riberalta Highway Project. The PBC carried the following borrowing terms: a 3% interest rate, 6 year grace period, 15 year maturity, 0.25% commitment fee, and 0.25% management (front-end) fee. Upon signature of the loan agreement, the Government of Bolivia had to remit a lump-sum payment of $1.231 million (.025% x $492,400,000) to China Eximbank. The lender made disbursements worth $0 in 2015, $98,480,000 in 2016, $42,406,123 in 2017, $75,629,694 in 2018, and $48,378,339 in 2019, $18,894,243 in 2020, and $12,5757,695 in 2021. The borrower made no principal repayments between 2015 and 2021. However, it paid interest and/or fees worth $763,668 in 2016, $4,258,765 in 2017, $5,825,928 in 2018, $7,046,159 in 2019, and unknown amount in 2020, and $9,108,710 in 2021. The loan’s (principal) amount outstanding was $0 as of December 31, 2015, $98,480,000 as of December 31, 2016, $140,886,123 as of December 31, 2017, $216,515,817 as of December 31, 2018, $264,894,156 as of December 31, 2019, $283,788,399 as of December 31, 2020, and $296,364,095 as of December 31, 2021. The purpose of the 508.07 km highway construction project is to link the departments of La Paz (west), Beni (northeast) and Pando (north), and improve trade between those regions and the rest of the country. The existing gravel highway is to be widened and paved, and 10 bridges will be constructed. The project is divided into four sections: Section I in the town of Rurrenabaque to Santa Rosa (95.68 km), Section II in the town of Santa Rosa to Australia (169.36 km), Section III in the town of Australia to El Choro (168.16 km), and Section IV in the town of El Choro to Riberalta (74.87 km). In June 2012, the original project contract was awarded to Brazilian construction firm Lupe, but was later scrapped due to community opposition related to the proposed route. China Railway Construction Corporation (International) Limited was then selected as the contractor responsible for project implementation in August 2014. The Bolivian Highway Administration (ABC) issued an order to commence work to China Railway Construction Corporation (International) Limited on November 30, 2015. Construction then began on October 25, 2016. However, in July 2018, construction was halted by the CRCC because little progress was made. As of mid-2019, the project had only achieved a 15% completion rate. The project has also become a source of local opposition and controversy. Dust, mud, traffic jams, and poor signaling have blighted the road over the past four years, according to residents and drivers who frequently travel between Rurrenabaque and the towns of Reyes and Santa Rosa, 95-kilometres north of the capital La Paz. The situation is reportedly worse during the dry season, when visibility is very poor and causes accidents. Also, small sewers along the route reportedly do not let water flow properly underneath. In February 2019, at the source of the Siwapi River, on the fringes of the the Santa Rosita communal territory, some 20 kilometers from Rurrenabaque, water from the Beni River collapsed the drain. During the same month, a meter’s worth of water inundated Darnixa Crespo Ciripi's house in the same farming community. Residents of Cosar claim that the size and poor functioning of the drains has caused them to lose chickens, plantain and rice crops. Those affected from the Cosar, Villa Copacabana, San José, Puerto Salinas, Wawa 1 and Río Viejo communities blocked the road in late February 2019, demanding that ABC build a bridge in Siwapi over the international highway, replacing the collapsed sewer. Then, in May 2019, Bolivia’s Public Works Minister Oscar Coca threatened to fine China Railway Construction Corporation (International) Limited for breach of contract. He was reportedly said that ‘[t]here is a serious problem with a road that goes from Rurrenabaque to Riberalta, … [and] unfortunately the company is not complying.’ Scientists have also expressed serious concerns about moving earth, deforestation, seasonal flooding and the destruction of vegetation during the road’s construction, as well as non-disclosure of mitigation and compensation measures by China Railway Construction Corporation (International) Limited. One environmental NGO described it as ‘the most contentious project in the country’.

Additional details

1. The Spanish project title is Proyecto Carretera Rurrenabaque-Riberalta. The Chinese project title is 玻利维亚鲁雷纳瓦克公路项目. 2. This project is linked to Project ID#52515 because the original $492 million PBC was split into two, but both amounts are still for the same highway project. 3. Upon signature of the PBC agreement, the Government of Bolivia had to remit a lump-sum payment (management fee) of $1.231 million (.25% x $492,400,000) to China Eximbank. In the 39 days that elapsed between the start date of the loan (November 14, 2015) and the first date when the Government of Bolivia was expected to pay a commitment fee, the undisbursed balance of the loan was still $492,400,000, so China Eximbank charged the Government of Bolivia a pro-rated commitment fee of $133,358 [.25% x $492,400,000 x (39/360)]. Then, in the first six months of 2016, China Eximbank disbursed $98,480,000 to the Government of Bolivia, leaving the undisbursed balance of the loan at $415,918,000 and Government of Bolivia a commitment fee charge of $558,699.

Number of official sources

18

Number of total sources

31