China Eximbank provides RMB 599.2 million government concessional loan for Phase 2 of Vaico Irrigation Project (Linked to Record ID#39178, #62162)

Project narrative

On October 13, 2016, China Eximbank and the Government of Cambodia signed an RMB 599,253,500 government concessional loan (GCL) for Phase 2 of the Vaico Irrigation Project. The borrowing terms of the GCL were as follows: 20-year maturity, 7-year grace period, and 2% interest rate. On the same day, the Chinese Government and the Government of Cambodia signed an RMB 229,384,200 interest-free loan agreement for Phase 2 of the Vaico Irrigation Project (captured in Record ID#62162). The borrowing terms of the loan from China’s Ministry of Commerce (MOFCOM) were as follows: 20-year maturity, 10-year grace period, and 0% interest rate. According to the Government of Cambodia’s ODA Database, China Eximbank made two loan disbursements between 2020 and 2021 (an RMB 49,210,533 loan disbursement in 2020, and an RMB 16,403,536 loan disbursement in 2021) and MOFCOM made two loan disbursements between 2020 and 2021 (an RMB 42,543,117 loan disbursement in 2020, and an RMB 14,181,11 loan disbursement in 2021). The purpose of this project is to improve the provision of irrigated water to Kampong Cham and Prey Veng provinces. The purpose of the project’s second phase is to improve the provision of irrigated water to Kampong Cham and Prey Veng provinces. Phase 2 includes two parts. Part I was supported by the GCL and it involved the construction of irrigation canal infrastructure in Svay Rieng and Prey Veng provinces — including 2 main canals, a 23.5 km long canal, and a reservoir. Upon completion, Part I was expected to irrigate over 10,000 ha of rice paddies. Part II was supported by the ETCA (interest-free loan). It was initially designed to support Kampong Cham, Prey Veng, and Svay Rieng provinces, but later rescoped to only cover Prey Veng and Svay Rieng provinces. The project’s first and second phases were together expected to provide irrigation to an estimated 250,00014-300,000 hectares of farmland, thereby providing a stable irrigation source for farmers to increase their yields and improve their resiliency in the face of climate change and reduce the prevalence of hunger and poverty in the region. Guangdong Foreign Construction Co., Ltd. (GDFC) was the EPC contractor responsible for Phase 2 implementation. Guangzhou Wanan Construction Supervision Co., Ltd. (GWCSC) was responsible for project supervision and management. This project commenced on November 1, 2016 and it was originally expected to reach completion in December 2019. On January 23, 2021, Rasmei Kampuchea Daily Newspaper reported that Phase 2 was nearly complete, with all canals completed in Prey Veng province and ongoing construction activities in Svay Rieng province. Multiple sources indicated that Phase 2 is completion. However, its precise date of completion is unknown. Cambodia’s Ministry of Water Resources and Meteorology (MoWRaM) has noted that once the construction company completed work on the project, it would be handed over to MoWRaM for management.