Project ID: 42318

China Eximbank contributes to $654.1 million syndicated buyer’s credit loan for JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project (Linked to Project ID#98789, #42302, #66737)

Commitment amount

$ 402271666.39876723

Adjusted commitment amount

$ 402271666.4

Constant 2021 USD

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Belarus

Sector

Industry, mining, construction (Code: 320)

Flow type

Loan

Level of public liability

Central government debt

Financial distress

Yes

Infrastructure

Yes

Category

Intent

Mixed (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2011-06-14

Actual start

2012-05-28

Actual complete

2017-12-10

Geography

Description

On June 14, 2011, China's Eximbank and the Industrial and Commercial Bank of China (ICBC) and the Government of Belarus signed a $654,163,995 syndicated buyer’s credit loan agreement [№ BLA201104] for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project. The loan carried an 11.5-year maturity, a 7.5-year grace period, annual interest rate of 6-month LIBOR plus a 3% margin. The loan was scheduled for repayment between January 2019 and January 2023. AidData estimates that China Eximbank contributed $327,081,997.5 (captured via Project ID#42318) and ICBC also contributed $327,081,997.5 (captured via Project ID#98789) to this syndicated loan. Then, on April 26, 2012, the Government of Belarus on-lent the proceeds of the loan to a state-owned company called JSC "Svetlogorsk Pulp and Cardboard Mill" (or ОАО «Светлогорский целлюлозно-картонный комбинат» or ОАО "СветлогорскХимволокно”). JSC "Svetlogorsk Pulp and Cardboard Mill" then used the loan proceeds to finance approximately 85% of the cost ($800 million) of a commercial contract that it signed with China CAMC Engineering Co., Ltd. (CAMCE) on October 11, 2010. The purpose of the project was to support the construction of a bleached sulfate production facility at the cellulose and cardboard plant in the city of Svetlogorsk. Upon completion, it was envisaged that the facility would have the capacity to produce 400,000 tons per year of bleached sulphate cellulose (used in paper and cardboard production). CAMCE was the general (EPC) contractor responsible for implementation and it appears to have hired CMEC as a subcontractor. Construction began on or around May 28, 2012. The project was completed on December 10, 2017. However, it encountered a number of problems during and after implementation. CAMCE allegedly violated building codes and supplied defective equipment. A strong and unpleasant odor was also reported within the vicinity of the newly constructed facility. As of 2019, the facility was not fully operational. The China Eximbank/ICBC loan that was issued for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project also financially underperformed vis-a-vis the lenders' original expectations. JSC "Svetlogorsk Pulp and Cardboard Mill" could not fully service its debts to China Eximbank and ICBC and the Ministry of Finance of Belarus had to step in and provide partial loan repayment. JSC "Svetlogorsk Pulp and Cardboard Mill" is a loss-making enterprise that has not shown a net profit since 2012. At the beginning of 2019, the company's total debt (about $900 million) was significantly higher than the value of its fixed assets.

Additional details

1. This project is also known as the Bleached Sulfate Cellulose Plant Construction Project. The Russian project title is «Строительство завода по производству сульфатной беленой целлюлозы на базе открытого акционерного общества «Светлогорский целлюлознокартонный комбинат» or проекта «Строительство завода по производству сульфатной беленой целлюлозы». The Chinese project title is 建的白俄罗斯40万吨纸浆厂项目 or 斯韦特洛戈尔斯克年产40万吨纸浆厂建设项目. 2. The $654 million China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset published by Boston University’s Global Development Policy Center in December 2020. The Government of Belarus’ sovereign bond prospectus states that the Chinese Government has lent $1,000,800,000 to the Government of Belarus for pulp and paper industry activities. This amount is almost exactly equivalent to the sum of the value of the two CDB loans in 2012 and 2014 for the Dobrush Paper Factory Upgrading Project (captured in Project ID#66992 and Project ID#66993) and the China Eximbank loan in 2011 for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project (captured in Project ID#42318). 3. China Eximbank also provided a $29.75 million buyer’s credit loan to JSC "Svetlogorsk Pulp and Cardboard Mill” in 2014, which is captured in Project ID#66737. 4. The all-in interest rate that applies to this loan (3.398%) was estimated by taking the average 6-month LIBOR rate during the month (June 2011) when the loan agreement was finalized (0.398%) and adding a 3% margin. 5. The exact size of China Eximbank and ICBC’s respective financial contributions to the $654.1 million syndicated loan are unknown. For the time being, AidData assumes that both members of the lending syndicate contributed equal amounts ($327,081,997.5)

Number of official sources

14

Number of total sources

27

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Details

Cofinanced

Yes

Cofinancing agencies [Type]

Industrial and Commercial Bank of China (ICBC) [State-owned Commercial Bank]

Direct receiving agencies [Type]

Government of Belarus [Government Agency]

Indirect receiving agencies [Type]

JSC Svetlogorsk Pulp and Cardboard Mill [State-owned Company]

Implementing agencies [Type]

China CAMC Engineering Co., Ltd. (CAMCE) [State-owned Company]

Loan Details

Maturity

12 years

Interest rate

3.398%

Grace period

8 years

Grant element (OECD Grant-Equiv)

18.01%

Syndicated loan

Export buyer's credit

Investment project loan