Narrative
Full Description
Project narrative
On December 28, 2010, China Eximbank and the Government of Fiji’s Ministry of Economy signed an RMB 325,989,122 government concessional loan (GCL) agreement for the Sigatoka Valley Road and Sawani-Serea Road Upgrade Project. The GCL carries the following borrowing terms: a 2% interest rate, a 20.1666 year maturity (final maturity date: February 25, 2031), and an unknown grace period. The proceeds of the GCL were to be used by the borrower to finance an RMB 328 million ($54.03 million) commercial contract with China Gezhouba Company Ltd (CGGC), which was signed on July 15, 2010. The loan’s (principal) amount outstanding was RMB 168,252,450.25 (FJD 52,475,579.41) as of June 30, 2023. The borrower made principal payments worth RMB 21,031,556.28 (FJD 6,833,437.71) and interest payments worth RMB 3,732,517.03 (FJD 1,212,672.18) between July 1, 2022 and June 30, 2023. The purpose of the project was to (a) upgrade a 15km segment of Sigatoka Valley Rd that runs from Nacocolevu the base of Narewa Hill (200 meters short of the Dreke Road turn-off and Narata village); and (b) upgrade a 19-kilometer earth-and-broken-stone Sawani-Serea road into a 7.3-meter-wide controlled-access asphalt road that would allow for a driving speed of 60km/h. CGGC was the contractor responsible for implementation. The Sigatoka Valley road upgrade project started on May 27, 2011 and it was completed on May 9, 2014. The Sawani-Serea road upgrade project began construction on June 1, 2011 and it was completed on May 9, 2014. The Sigatoka Valley road upgrade project provides access to the “salad bowl” of Fiji, a fertile valley that is dotted with small productive farms and market gardens and supplies much of Viti Levu with fresh produce. The upgrading of the road sought to enhance connectivity, improve livelihoods, and increase economic activity in Sigatoka and Nausori areas. The upgrading of the Sawani-Serea road has reduced the time to the Suva market from two hours to one hour. There are some indications that the China Eximbank loan for the Sigatoka Valley Road and Sawani-Serea Road Upgrade Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Fiji signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple government concessional loan (GCL) agreements (as captured via Record ID#95365). Debt service payments under all or many of these loan agreements were again deferred in 2021 (as captured via Record ID#95363).
Staff comments
1. This project is also known as the Sigatoka Valley Road and Sawani-Serea Road Upgrade Project. The Chinese project title is 斐公路升级改造项目中Sawani Serea路段工 and 贷实施斐公路升级改造项目中Sigatoka Valley路段工程中. 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies this project as being supported by a USD $328 million China Eximbank loan. However, AidData relies on the face value of the loan (RMB 325,989,122) that Fiji’s Ministry of Economy reported to AidData’s Executive Director in April 2018 correspondence. See https://www.dropbox.com/s/uu8muq0ldgd8kjp/FW-%20Request%20for%20List%20of%20Loans%20from%20Chinese%20Government%20Institutions.eml?dl=0 3. The data on amounts outstanding and repayments were provided by Fiji's Ministry of Finance to AidData's Executive Director in June 2023. See https://www.dropbox.com/s/jqsnza05ar9r8x3/Data%20on%20data%20on%20disbursements%2C%20repayments%20and%20amounts%20outstanding%20under%20China%20Eximbank%20loans.pdf?dl=0 4. The Sigatoka Valley Road Upgrade Project and Sawani-Serea Road Upgrade Project are part of four road construction projects agreed to by the Chinese Government and the Government of Fiji on December 22, 2010, and funded by China Eximbank (see Record ID#68572). 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Fiji was 5.6666 years in 2010. AidData estimates the grace period of the China Eximbank loan that supported the Sigatoka Valley Road and Sawani-Serea Road Upgrade Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 6. This loan participated in DSSI with China. AidData acquired the number of loans that were rescheduled in 2020 and 2021 from Fiji's ministry of finance website. All loans participated in both DSSI 2020 and 2021.