Chinese Government provides RMB 46 million interest-free loan for Sana’a Textile Mill Equipment Upgrading and Renovation Project

In 2003, China’s Ministry of Commerce (MOFCOM) issued an RMB 46 million ($7.5 million) interest-free loan to the Government of Yemen for the Sana’a Textile Mill Equipment Upgrading and Renovation Project. The proceeds of the loan were used to finance a commercial contract between Yemen Textile Corporation (a state-owned company) and China CAMC Engineering Co., Ltd. (CAMCE), which was signed on September 18, 2004. The purpose of the project was to upgrade and renovate the equipment of a textile mill in the capital city of Sana’a. CAMCE, a subsidiary of China National Machinery Industry Corporation (SINOMACH), was the contractor responsible implementation. It delivered the requisite equipment in March 2005. However, the project subsequently stalled because a supporting set of civil works at the textile mill were not undertaken on schedule. On June 1, 2005, the operations of the textile mill were suspended to facilitate the installation of the equipment. The employees of the textile mill were granted leave with pay from July 2005 during the equipment installation and textile mill renovation process. In June 2008, CAMCE dispatched a group of engineers and technicians to Sana'a to oversee the installation and commissioning of the new equipment. MOFCOM also undertook a site inspection on June 28, 2008. Other key components of the project were completed in October 2008. Trial operations of the new equipment took place in later 2010 and early 2011, and a project handover certificate was issued on or around January 16, 2011. However, the textile mill was plagued by several serious problems following the completion of the project. The mill became financially insolvent (in part because hundreds of employees were granted leave with pay from July 2005 to October 2016). Also, during a set of Saudi-led airstrikes against Houthi rebels in 2015, the mill was bombed.

Additional details

1. This project is also known as the Sana’a Textile and Spinning Factory Equipment Renovation Project. The Chinese project title is 也门萨那纺织厂设备更新项目 or 也门萨那纺织厂更新改造项目. The Arabic project title is مصنع الغزل والنسيج بصنعاء. 2. The Sana’a textile mill (factory) was originally constructed with financial assistance from the Chinese Government. The Chinese Government and the Government of Yemen agreed to build the factory in 1958 and construction began in 1964. The factory began production in 1967 under the supervision of Chinese technical experts. The factory later fell into a state of disrepair. 3. Since the borrowing terms of the interest-free loan are unavailable, AidData has set maturity to 20 years by default and the grace period to 10 years by default, per China's Foreign Assistance White Paper (http://www.cidca.gov.cn/2018-08/06/c_129925064_3.htm) which states that the maturity of interest-free loans is 20 years, with a drawdown period of 5 years, grace period of 5 years, and repayment over 10 years. AidData treats the drawdown period as providing 5 years of additional grace.

Number of official sources

14

Number of total sources

19