China Eximbank provides RMB 750 million government concessional loan for Beira Fishing Port Rehabilitation Project

Project narrative

On September 10, 2014, China Eximbank and the Government of Mozambique signed an RMB 750 million ($119,976,000) government concessional loan (GCL) agreement for the Beira Fishing Port Rehabilitation Project. Then, on November 15, 2014, the Government of Mozambique ratified the loan agreement. The loan carries the following borrowing terms: a 2% interest rate, a 7 year grace period, and a 20 year maturity. Its first scheduled principal payment date is September 21, 2022 and its last scheduled principal payment (maturity) date was September 21, 2035. The loan's (principal) amount outstanding was $104,533,230 as of December 31, 2022. The Government of Mozambique on-lent the GCL proceeds to Porto de Pesca da Beira (a Mozambican state-owned fishing port company). The project involved the construction of a dock that is 377 meters long (compared with 188 meters previously) in order to allow 16 industrial vessels to be moored simultaneously. It also involved the installation of six cold stores, an ice factory with a capacity of 60 tonnes per day, a fish processing room with a capacity of 50 tonnes per day, and a handling capacity of 700,000 tons per year. Beira’s fishing port was destroyed by cyclone Eline, which struck the provincial capital of Sofala in February 2000. China Harbor Engineering Company (CHEC) was the contractor responsible for implementation. A groundbreaking ceremony took place on June 27, 2016 and the project was officially completed and handed over to the authorities in Mozambique on October 28, 2019. There are some indications that the China Eximbank loan for the Beira Fishing Port Rehabilitation Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond. Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government. Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Record ID#66283).