China Eximbank provides RMB 700 million government concessional loan for Baoré Cement Factory Project (Linked to Record ID#396)

Project narrative

On September 14, 2006, the Government of Chad and China CAMC Engineering Co, Ltd signed a memorandum of understanding regarding the construction of a turnkey cement plant in Baoaré (Mayo Dallah Department). Then, in July 2007, China Eximbank and the Government of Chad signed an RMB 700 million ($92,029,990.50) government concessional loan (GCL) agreement for the Baoré Cement Factory Project. This loan carried a 1.5% interest rate, a 5 year grace period, and a 13-year maturity. The proceeds of the GCL were on-lent to Société National de Ciment Tchad (SONACIM Tchad), a Chadian state-owned company that was established to manage the Baoré Cement Factory. The ultimate borrower (SONACIM Tchad) the use the proceeds of the GCL to finance a $87,784,200 commercial contract with China CAMC Engineering Co, Ltd, which was signed on January 30, 2007. The Baoré Cement Factory Project involved the construction of a cement plant with annual production capacity of 200,000 tons as well as a dedicated heavy fuel oil (HFO) power station, mining equipment and access roads. The plant occupies an area of 17 hectares and it is located in the village of Bissi Kéda within Mayo Kebbi West State (approximately 8km from the limestone quarries in Baoaré). To control the quality of the cement that is produced, a modern laboratory adjoins the factory; it is used to analyze samples taken at random to verify their compliance with international standards. Beijing Triumph Materials Engineering Design Co. was the contractor responsible for project design and China CAMC Engineering Co, Ltd. was the contractor responsible for implementation. The project commenced on December 17, 2007 and was originally scheduled to reach completion within 30 months (June 17, 2010). The factory was officially completed and put into production on February 16, 2012. Chad's President Idriss Deby, Prime Minister Emmanuel Nadingar, and Chinese Ambassador Yang Guangyu attended the opening ceremony for the factory. The region where the cement plant is located has three quarries with 7 million tonnes of limestone. It also abounds in clay, laterite and sand, three raw materials that go into the manufacture of cement. The cement plant reportedly employs 300 Chadian workers and 100 Chinese workers. There are indications that the China Eximbank loan for the Baoré Cement Factory Project financially underperformed vis-a-vis the original expectations of the lender. After a sharp decline in oil prices in 2014-2015, Chad experienced an economic recession and a debt crisis and its government sought to renegotiate the borrowing terms of the China Eximbank loan for the Baoré Cement Factory Project. A rescheduling agreement was finalized in April 2017: China Eximbank agreed to the lengthen the maturity of the loan and reschedule arrears that had accumulated (as captured via Record ID#55744). It appears that China Eximbank did not require the accumulated arrears to be repaid before rescheduling the maturity of the loan. Then, on or around June 16, 2020, Baoré Cement Factory suspended its production activities due to a combination of factors, including (a) technical defects at the factory's production facilities, (b) difficulty retaining technicians to operate and maintain the factory, and (c) excessive debt accumulation by SONACIM Tchad between 2012 and 2020. It relaunched its productivities on December 5, 2020.