Narrative
Full Description
Project narrative
On March 29, 2007, 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 Concessional Loans by China to Vanuatu. On the same day (March 29, 2007), China Eximbank and the Government of the Republic of Vanuatu (represented by the Ministry of Finance and Economic Management) signed an RMB 68 million ($9.78 million) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2007) 7 TOTAL NO. (178)] for the Vanuatu Y12 Aircrafts Purchase 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 1% management fee, and a 0.75% commitment fee. Vanuatu’s Ministry of Finance and Economic Management on-lent the proceeds of the GCL to Air Vanuatu (Operations) Limited (“Air Vanuatu”), a state-owned airline. The ultimate borrower (end-user) then used the proceeds of the GCL to finance a commercial contract [NO. ATE/VAN/06M0220] between Air Vanuatu and China National Aero-Technology Import and Export Corporation (CATIC), which was signed on September 28, 2006. The purpose of this project was to acquire two Y12 (Y-12) aircraft for use in Air Vanuatu’s fleet. Both aircraft were officially delivered and handed over to the local authorities on December 18, 2008. The loan that China Eximbank issued was part of a “buy two get one free deal” in which the Chinese Government donated a third Y12 aircraft (worth $4.89 million). A Chinese Government delegation handed over an airworthiness certificate for the third Y12 aircraft to the Vanuatu Government in January 2009. Then, in 2014, Vanuatu’s Minister of Finance and Economic Management reported to Parliament that one Y12 was in use in Vanuatu, another was in disuse, and a third had been leased to the Tongan Government. The RMB 68 million loan from China Eximbank loan is captured in Record ID#39256 and $4.89 million Chinese Government grant is captured in Record ID#39257.
Staff comments
1. The China Eximbank loan that supported this project is not included in the Chinese Overseas Development Finance Dataset published by Boston University’s Global Development Policy Center in December 2020. 2. The China Eximbank loan agreement can be accessed in its entirety via https://www.documentcloud.org/documents/20488911-vut_2007_450. 3. In source 35365, the following is detailed: "An advance of 1 billion vatu was made to Air Vanuatu in 2008 for the purchase of Y12 Aircraft from China. The purchase of these aircraft was funded by a loan from the Chinese Government which has been on-lent to Air Vanuatu. This loan was made in Chinese Yuan Renminbi and has since been revalued to 856 million vatu as at 31 December 2010. An amount of 856 million vatu is therefore shown as a liability in borrowings and an asset in advances to Air Vanuatu. The remaining advance balance for Air Vanuatu represent additional loan advances given to the airline in recent years. " This infers that the first data point for the 2008 being inaccurate, as the project/loan has been revalued.