China Eximbank pledges $22 million loan for Fisheries Rehabilitation Project

In the summer of 2009, a team of Chinese technicians visited Micronesia to carry out design inspections of potential fish processing projects financed by preferential loans from the Chinese government. This eventually materialized as the Luen Thai Fisheries project (or Fisheries Rehabilitation Project or 密克罗尼西亚渔业复兴项目) financed by a China Exim Bank concessional loan facility worth $22 million USD with a 5-year grace period and a 20-year maturity. Congressional Bill No. 16-124 also says the PRC was willing to convert the loan "into grant assistance if the fisheries project ultimately fails." According to Congressional Bill No. 16-124, on 17 June 2010, the FSM President was formally authorized to negotiate and execute this loan agreement on behalf of the Government, but AidData failed to find evidence of a signed final loan agreement marking Chinese commitment. The loan proceeds were to be used to refurbish four processing plants (one for each FSM state) and purchase eleven ships, three of which could be super long liners for frozen fish shipment. The National Government of the Federated States of Micronesia is the borrower, FSM Development Bank is the loan manager, and Luen Thai Fishing Ventures (LTFV) is the operator for the processing plants. LTFV was supposed to make lease payments to the FSM Government for the use and operation of the plants, and the FSM Government would in turn use that revenue to repay the China Exim Bank loan. According to Congressional Resolution No. 16-173, in November 2010, the FSM National Oceanic Resource Management Authority (NORMA) and LTFV signed an access agreement lasting 10 years. The plants were supposed to be constructed and/or refurbished entirely with materials imported from China, but AidData could not identify any implementing contractors. It is unclear if this project was ever carried out with Chinese financing since it was plagued by accusations of political interference and corruption.

Number of official sources

15

Number of total sources

23