China Eximbank provides RMB 340 million government concessional loan for Faleolo International Airport Upgrade Project (Linked to Project ID#96220, #96219)

In November 2014, China Eximbank and the Government of Samoa signed an RMB 340 million ($55,344,069.60) government concessional loan (GCL) agreement for the Faleolo International Airport (APW) Upgrade Project. The GCL carried the following borrowing terms: a 20.33-year maturity, a 5.33-year grace period, a 2% interest rate. The borrower was expected to use the proceeds of the GCL to finance an RMB 340 million commercial (EPC) contract with Shanghai Construction Group (SCG). The lender made disbursements worth WST 33,418,803 between between July 1, 2014 and June 30, 2015, WST 59,500,000 between between July 1, 2015 and June 30, 2016, WST 90,949,061 between between July 1, 2016 and June 30, 2017, WST 127,135,186 between between July 1, 2017 and June 30, 2018, and WST 128,987,342 between between July 1, 2018 and June 30, 2019. The loan's undrawn (undisbursed) balance was WST 34,671,189 as of June 30, 2017, WST 6,130,208 as of June 30, 2018, and WST 1,071,069 as of June 30, 2019. The borrower made no principal repayments between July 1, 2016 and June 30, 2017, no principal repayments between July 1, 2017 and June 30, 2018, no principal repayments between July 1, 2018 and June 30, 2019, principal repayments worth WST 4,378,594 between July 1, 2019 and June 30, 2020, and no principal repayments between July 1, 2020 and June 30, 2021. The loan's amount outstanding WST 0 as of June 30, 2014, WST 33,418,803 as of June 30, 2015, WST 59,500,000 as of June 30, 2016, WST 90,949,061 as of June 30, 2017, WST 127,135,186 as of June 30, 2018, WST 128,987,342 as of June 30, 2019, WST 124,488,667 as of June 30, 2020 and WST 121,732,890 as of June 30, 2021. The purpose of the project was to make improvements to Faleolo International Airport, which is located 40 kilometers west of Apia, the capital of Samoa (exact locational coordinates: -13.829722, -172.008333). It involved three primary tasks: (1) rehabilitation and resurfacing of existing airport pavements and upgrade of apron and taxiways including associated drainage works; (2) upgrading the existing terminal building; and (3) upgrading navigational aids and lighting. Upon completion, the upgraded airport was expected to have the capacity to serve 600,000 passengers a year or 200 passengers per hour. Shanghai Construction Group (SCG) was the general contractor responsible for implementation. Its Samoan subcontractors included the OTT Construction Company, Silva Transportation Co., Ltd, T&N Tolea Afia Co., Ltd, and Apia Cement Products Co., Ltd. The project was implemented in three phases. The groundbreaking ceremony for Phase 1 (the Departure Lounge) took place on July 22, 2015. However, construction did not begin until November 2015. Phase 1 was officially completed and handed over to the Samoan Government on November 30, 2016. As part of Phase 2, the airport’s Training and Emergency Operations Center and Mechanical Workshop were officially inaugurated on March 16, 2018. Phase 2 as a whole, which also involved the upgrading of the arrival area, was officially completed on May 10, 2018. Phase 3 involved the installation of the three new Aerobridges and it was officially completed on May 28, 2019. The Faleolo International Airport Upgrade Project was a target of criticism and controversy prior to its implementation. A World Bank report concluded that “[t]here was no economic analysis of this [project], it did not meet Samoa’s own procurement requirements and it contravened the agreed borrowing cost indicator included in the [World Bank’s development policy loan agreement with the Government of Samoa]. In the [World] Bank’s technical view the project is over-scaled and runs a high risk of being a white elephant. The financial analysis carried out by the Samoa Air Authority indicates that the terminal is not financially viable. The [China Eximbank] loan is [worth] 7.5 percent of GNP.” The World Bank subsequently decided to provide parallel financing and analytical and advisory assistance for the project. There are also some indications that the China Eximbank loan for the Faleolo International Airport Upgrade Project has financially underperformed vis-a-vis the original expectations of the lender. In 2020, as part of G20's Debt Service Suspension Initiative (DSSI), China Eximbank and the Government of Samoa signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple loan agreements, including the loan agreement for the Faleolo International Airport Upgrade Project. The total estimated suspension amount is $21,906,085. Then, in 2021, China Eximbank and the Government of Samoa signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due in 2021 under multiple loan agreements, including the loan agreement for the Faleolo International Airport Upgrade Project. The total estimated suspension amount was $16,436,000 ($13,506,000 in principal payments and $2,929,000 in interest payments). The 2020 debt rescheduling is captured via Project ID#96220. The 2021 debt rescheduling is captured via Project ID#96219.

Additional details

1. This project is also known as the Faleolo International Airport Terminal Building Upgrade Project. The Chinese project title is 萨摩亚国际机场升级改造项目 or 萨摩亚法莱奥诺国际机场升级改造项目 or 萨摩亚法莱奥洛 国际机场升级改造项目. 2. The Government of Samoa loan identification number for this project is 2014001. 3. The borrowing terms of the loan (20.33-year maturity, 5.33-year grace period, 2% interest rate) are drawn from the World Bank's Debtor Reporting System (DRS): https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 4. The amounts outstanding and repayments data are drawn from the annual Public Accounts of Samoa’s Ministry of Finance: https://www.dropbox.com/s/mqx2n1f5zvzh1l0/Public-Accounts-2014.pdf?dl=0 and https://www.dropbox.com/s/p93si5mz4lpapns/Public-Accounts-2015.pdf?dl=0 and https://www.dropbox.com/s/fye48g5n4yylqgk/Public-Accounts-2016.pdf?dl=0 and https://www.dropbox.com/s/hm8oorga2sqi9na/Public-Account-FY-2017.pdf?dl=0 and https://www.dropbox.com/s/n6miez702ndycis/Public-Accounts-2018.pdf?dl=0 and https://www.dropbox.com/s/1kh3a47s4i2oh3r/Public-Accounts-2019-.pdf?dl=0 and https://www.dropbox.com/s/3i4r1bd0ctjlumo/Public-Accounts-2020.pdf?dl=0 and https://www.dropbox.com/s/jt0expsqan3uy2n/Public-Accounts-2021.pdf?dl=0

Number of official sources

58

Number of total sources

64