China Eximbank provides RMB 240 million government concessional loan for Bajil Cement Factory Expansion and Modernization Project (Linked to Record ID#41176)

Project narrative

On December 12, 2006, China Eximbank and the Government of Yemen’s Ministry of Planning and International Cooperation signed an RMB 240,000,000 ($31,168,830) government concessional loan (GCL) agreement for the Bajil Cement Factory Expansion and Modernization Project (captured in Record ID#41175). Then, on February 12, 2008, the Yemeni Cabinet approved the GCL. The borrowing terms of the GCL are unknown. In addition, China Machinery Engineering Corporation (CMEC) and the Government of Yemen signed a $59,231,170 supplier credit (vendor financing) agreement on February 2, 2007 (captured in Record ID#41176). This agreement was referred by the Yemeni Cabinet to the Parliament on February 12, 2008. It was then approved into law on April 27, 2008 (Law No. 23). The borrowing terms of the supplier’s credit, which CMEC provided with support from an export seller’s credit from China Eximbank, are also unknown. The proceeds of the loan and the supplier credit ($90.4 million in total) were to be used by the borrower to finance 80% of the $113 million cost of a commercial contract with CMEC. The purpose of the project was the expand and modernize a cement factory in Bajil (باجل;) District (also known as Bajal or Bajel District and incorrectly transliterated from Chinese as Bagir or Baghir District) within Al Hudaydah Governorate. The ultimate objective of the project was to increase the annual cement production capacity of the plant from 250,000 tons to 850,000 tons per year and to construct a coal-fired power station at the cement plant. A commercial contract with CMEC was signed in December 2007, and project implementation commenced shortly thereafter. Then, on January 18, 2009, a supplementary contract with CMEC was signed for the construction of a 32MW coal-fired power station at the cement plant. However, implementation halted in early 2011 due to conflict and instability in Yemen (when the project had already achieved a 55% completion rate). Then, an agreement was signed in September 2012 to resume construction. In February 2014, representatives from CMEC, the Bajil Cement Factory, the Yemeni Ministry of Industry, and the Chinese Economic and Commercial Counselor’s Office met to discuss obstacles to project implementation. According to CMEC's website, the originally planned completion date was December 2014. However, it does not appear that this project ever reached completion. All CMEC employees involved in the implementation of this project were evacuated on March 30, 2015 after a series of Saudi-led airstrikes against Houthi rebels.