China Eximbank contributes $461 million to syndicated loan for Dhaka Elevated Expressway Construction Project (Linked to Record ID#92382)

Project narrative

On March 30, 2019, First Dhaka Elevated Expressway Company, Ltd. (FDEE or 公司第一达卡高架快速路有限公) — a project company and joint venture of China Shandong International Economic & Technical Cooperation Group Ltd (CSI) [34% equity stake], Sinohydro Corporation Ltd. [15% equity stake], and Italian-Thai Development Public Company Limited (ITD) [51% equity stake] — signed an $861 million syndicated loan agreement with China Eximbank and the Industrial and Commercial Bank of China (ICBC) for the Dhaka Elevated Expressway Construction Project. China Eximbank contributed $461 million to the loan syndicate (captured via Record ID#52763) and ICBC contributed $400 million to the loan syndicate (captured via Record ID#92382). The loan reportedly carried a 4% interest rate and a 15-year maturity, but its grace period is unknown. The project sponsors (CSI, Sinohydro Corporation Ltd., and ITD) issued loan repayment guarantees in proportion to their ownership stakes in FDEE (e.g. Sinohydro Corporation Ltd. guaranteed 15% of the $861 million loan). The proceeds of the loan are to be used by the borrower to partially finance a commercial (EPC) contract between Bangladesh Bridge Authority (BBA) and China National Import and Export Corporation, which was signed on November 30, 2017. The $1.263 billion project is a public-private partnership (PPP) that is being implemented on a build-operate-transfer (BOT) basis and financed according to a debt-equity ratio of 65:35. On April 2, 2020, the first loan disbursement (worth RMB 390 million) was made. By June 2023, the loan had achieved a 39.9% disbursement rate ($343.9 million out of $861 million). By February 2024, the loan had disbursed 12 installments and achieved an overall disbursement rate of 49.6% ($427.76 million out of $861 million). The purpose of the project is the design, construction, operation, and maintenance of a four-lane Elevated Expressway that will commence at Shahjalal International Airport and run alongside New Airport Road, with the rail alignment through the Mohakhali, Tejgaon, and Moghbazar to Kamalapur Railway-station and then the alignment crossing over Jatrabari before connecting to Dhaka Chittagong Highway. The scope of works includes the construction of culverts, toll plazas, underpass and overpass, lay byes, wayside amenities; installation of a computerized toll collection system, providing adequate lights and development of service areas with all required facilities. The total length of the Dhaka Elevated Expressway (also known as the Dhaka-Ashulia Elevated Expressway) is approximately 46.73 km. The construction of the expressway has been divided into three phases – first phase is 7.45km from Kawla (airport) to Banani; second phase is 5.85km from Banani Rail Gate to Moghbazar and third phase is 6.43km from Moghbazar to Kutubkhali. To ease traffic inside the capital, the 19.73km-long main elevated mainline of the expressway will have 31 connecting ramps with a combined length of 27km. The project is ultimately expected to generate two sources of revenue: (a) toll revenue and (b) viability gap funding (VGF) from the Government of Bangladesh worth 27% of the total estimated project cost. China National Import and Export Corporation is the contractor responsible for implementation. On April 1, 2018, Bangladesh Bridge Authority issued the ‘Construction Commencement Date Notification’, which was considered authorization to begin implementation. However, construction did not begin until January 1, 2020 and the first loan disbursement was not made until April 2, 2020. Project implementation activities were temporarily suspended in mid-2020 due to the COVID-19 pandemic, but work resumed on September 7, 2020. The project achieved an overall completion rate 30.5% by September 2021, with the first phase at a 66.25% completion rate, the second phase at a 21.5% completion rate, and the third phase at a 2.33% completion rate. The first segment of the expressway was inaugurated on September 2, 2022, with an 11.5 km section from South Kawla to Farmgate opened to the public on September 3, 2022. The ramp connecting it to the Karwan Bazar section was opened in March 2023. Then, on January 17, 2024, ICBC and China Eximbank withheld a loan disbursement due to a failure to make interest payments and demanded that ITD transfer the majority of its remaining shares in FDEE to CSI and Sinohydro Corporation Ltd., prompting ITD to initiate arbitration proceedings at the Singapore International Arbitration Centre. Between February 2024 and September 2024, project implementation was halted due to (a) FDEE's failure to secure the necessary funding to continue operations, and (b) equity share transfer disputes among FDEE's shareholders. Then, in September 2024, the Bangladesh Bridge Authority urged FDEE to resume work immediately, warning that penalties would be imposed if project implementation deadlines were not met. The project was originally expected to reach completion in July 2023. The expected completion date was later pushed back to June 2024. It was later pushed back to June 2025. Once completed, 80,000 vehicles are expected to use the overhead road (elevated expressway) each day.