China Eximbank provides $18.95 million preferential buyer’s credit for E-Health Project (Linked to Record ID#40435)

Project narrative

On August 21, 2014, China Eximbank and the Government of Mongolia signed a preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC 2014 (19) TOTAL (313)] for the E-Health Project. The PBC was approved pursuant to a general loan agreement (captured via Record ID#40435) for the utilization of a $500 million preferential buyer’s credit for various projects that was signed by the two governments on June 16, 2011. The borrowing terms of the PBC (loan) were as follows: a 20 year maturity, a 7 year grace period, a 2% interest rate, and a 0% default (penalty) interest rate. The borrower was responsible for making 26 equal, semi-annual repayments (worth $728,846.15) after the expiration of the loan’s grace period. The proceeds of the PBC were to be used by the borrower to finance 100% of a $18,950,000 commercial contract (No. EH-1) between Mongolia’s Ministry of Health and Huawei Technologies Co., Ltd., which was signed on August 29, 2012. The purpose of the project was to provide 7,000 computers, e-medical software, and 48 generators to 15 public hospitals, 9 districts and 48 aimag hospitals. Huawei Technologies Co., Ltd. was the general contractor responsible for implementation. However, it hired a local Mongolian sub-contractor called Metronetworks, which reportedly had no experience in e-medical software development. The project officially commenced on January 6, 2016. However, it was plagued by various problems and delays and it is unclear if it ever reached completion. Mongolia’s Minister of Health and Sports, G.Shiilegdamba, was arrested by the Independent Authority Against Corruption of Mongolia in early November 2015 on allegations of bribery in the bidding process for the E-Health Project. A young man named E. Gantulga, the Executive Director of Metronetworks, was also investigated alongside Minister G. Shiilegdamba.