Narrative
Full Description
Project narrative
On January 27, 2011, China Eximbank and Myanmar Foreign Trade Bank (MFTB) signed a $200 million buyer’s credit loan (BCL) agreement for the Naypyidaw International Airport Construction Project. The borrowing terms of the BCL are unknown. However, it is known that the borrower was to use the proceeds from the BCL to finance two EPC contracts: $94.8 million EPC contract that was signed by China Machinery Engineering Corporation (CMEC) and Myanmar's Ministry of Transport in May 2010, and a $117 million EPC contract that was signed by China Harbour Engineering Company (CHEC) and Myanmar's Ministry of Transport on December 15, 2010. The purpose of the project was to construct an international airport in the city of Naypyidaw with the capacity to handle 3.5 million passengers a year. More specifically, it involved the construction and installation of a Passenger Terminal Building, Apron & Remote Parking, Runway, Taxiway, Bridges, Departure Control System, Terminal Electrical System, Control Tower, Firefighting System and a Ground Handling System. The project was implemented in two ‘lots’ and each lot was supported by a separate EPC contract. The project commenced on January 26, 2011 and it was officially completed when the airport was inaugurated on December 19, 2011. A final acceptance certificate (FAC) was issued by the project owner in 2013. The project’s originally anticipated end date was July 2014. There are some indications that the China Eximbank loan for the Naypyidaw International Airport Construction Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Myanmar signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). 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 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Record ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#96221).
Staff comments
1. This project is also known as the Naypyidaw International Airport Project, the Naypyidaw International Airport Project II, the Nay Pyi Taw International Airport Reconstruction Project, the Naypyidaw International Airport Expansion Project, and the Nay Pyi Taw International Airport Construction Project. The Chinese project title is 奈比多國際機場 or 缅甸内比都国际机场项目. The Burmese project title is နေပြည်တော် အပြည်ပြည်ဆိုင်ရာ လေဆိပ် or ေနျပည္ေတာ္အျပည္ျပည္ဆုိင္ရာေလဆိပ္. 2. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 15.0477 years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the Naypyidaw International Airport Construction Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 5.7977 years in 2011. AidData estimates the grace period of the China Eximbank loan that supported the Naypyidaw International Airport Construction Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 4.6293% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported the Naypyidaw International Airport Construction Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0