China Eximbank provides RMB 481.4 million government concessional loan for Gwadar Port Project (Linked to Record ID#38995, #35124, #72688, #72689, #92475)

Project narrative

During the visit of Chinese Prime Minister Zhu Rongji to Pakistan in May 2001, the Gwadar deep water port was a key item of discussion. Pakistani Finance Minister Shaukat Aziz said that the Chinese Government has agreed to help fund the construction of phase one of the $250 million Gwadar Deep Water Port Project. Then, on August 10, 2001, the Chinese Government and the Government of Pakistan signed a financing framework agreement for development of Phase 1 of the Gwadar Deep Water Port Project. The Chinese Government ultimately signed six different financial agreements for Phase 1. (1) In 2001, the China Ministry of Commerce signed a $31 million grant agreement (captured via Record ID#35124) (2) In 2001, the China Ministry of Commerce signed another $31 million grant agreement (captured via Record ID#72688) (3) In 2001, the China Ministry of Commerce signed a $18 million grant agreement (captured via Record ID#72689) (4) On December 26, 2002, China Eximbank signed an RMB 481,400,000 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2002) 3 TOTAL NO. (95)]. It carries a 1.8% interest rate, a 0.8 year grace period, and a 19.8 year maturity (captured via Record ID#38996) (5) In 2003, China Eximbank signed an RMB 502,690,200 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2003) 3 TOTAL NO. (95)]. The borrowing terms are unknown (captured via Record ID#92475) (6) On March 24, 2006, China Eximbank and the Government of Pakistan signed a $22.26 million preferential buyer's credit (PBC) agreement [BLA05147] for the Gwadar Port Channel Deepening Project (also known as the Additional Dredging Works of Gwadar Deep Water Port Phase 1 Project). It carries a 3% interest rate, a 5.8 year grace period, and a 17.4 year maturity. Its proceeds were used to finance a commercial contract that was signed on August 10, 2005 (captured via Record ID#38995). Phase 1 involved the dredging of the Gwadar port to 14.5 meters. The objective of the project was to enable 50,000 DWT vessels to use the port. The Gwadar Port Channel Deepening Project was an extension to Phase 1 of the Gwadar Deep Water Port Project, which comprised three multi-purposes berths of 602-meter total length and also accommodated roll-on roll-off vessels, a 100-meter service berth, 4.25-kilometer approach channel dredged to 11.5 meter-12.5 meter and demarcated with buoys and turning lights. China Harbour Engineering Company Ltd (CHEC) -- a subsidiary of China Communications Construction Company Limited -- was the contractor responsible for project implementation. On March 22, 2002, a groundbreaking ceremony took place. At that time, the project was expected to reach completion by March 2005. The channel was successfully dredged and deepened to 14.5 meters in February 2007. Prime Minister Shaukat Aziz inaugurated the deep sea port on March 20, 2007. Gwadar Port was then taken over by China Overseas Ports Holding Company Limited (COPHC) on May 16, 2013 — for 40 years. Gwadar Port, located about 350 kilometers west of Karachi on the Arabian Sea coast, is now considered the nearest warm water port for the Central Asian states for their trade with Europe, East Asia, and the Americas. There are some indications that the RMB 481,400,000 government concessional loan for the Gwadar Port Project financially underperformed vis-a-vis the original expectations of the lender. 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 RMB 481.4 million government concessional loan agreement for the Gwadar Port Project. Then, on November 19, 2020, China Eximbank and the Government of Pakistan signed another debt suspension agreement [No. DSSI2021PHASE1-029]. 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 RMB 481.4 million government concessional loan agreement for the Gwadar Port 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 RMB 481.4 million government concessional loan agreement for the Gwadar Port 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#95579. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Record ID#96253.