China Eximbank provides $102.8 million buyer’s credit loan for 22 km Farasol Mbéga-Port-Gentil Road Project (Linked to Project ID#60747 and #73174)

On December 3, 2015, during the state visit of Gabonese President Ali Bongo Ondimba to China, the Government of Gabon and China Eximbank signed a buyer’s credit loan (BCL) agreement worth $102,849,176.27 for the 22 km Farasol Mbéga-Port-Gentil Road Project. The BCL carries the following terms: a 15 year maturity, a 3 year grace period, an interest rate of 6-month LIBOR plus a 3.2% margin, a 1% default (penalty) interest rate, a 0.5% ($514,245.88) management fee, and a 0.5% commitment fee. The proceeds from the BCL will be used to finance 95% of the cost of a commercial contract with China Road and Bridge Corporation (CRBC). The Government of Gabon was expected to cover the remaining 5% of the cost of the commercial contract. The project involved the construction of a 22km road segment from Farasol-Mbéga to Port-Gentil. This road segment connects to the starting point of the China Eximbank-financed Port Gentil-Omboué (PO) Road (captured via Project ID#60747 and Project ID#73174). CRBC was the contractor responsible for implementation. A groundbreaking ceremony took place on February 28, 2016. The project was reportedly completed; however, its precise completion date is unknown. There are some indications that the China Eximbank loan for the 22 km Farasol Mbéga-Port-Gentil Road Project may have financially underperformed vis-a-vis the original expectations of the lender. In mid-2014, a decline in international oil prices generated sharp reductions in Gabon’s oil exports and fiscal revenues. The country’s rising fiscal deficit led to the accumulation of arrears to external creditors. By 2017, the stock of the Government of Gabon’s external arrears stood at $115 million, including arrears to China, Canada, Germany, Spain, France, Israel, and South Korea. All of these arrears were successfully cleared by 2020. However, the Government of Gabon accumulated $3 million of additional arrears to Chinese creditors in 2020. By the end of May 2021, ‘the stock of [the Government of] Gabon’s external arrears stood at CFAF 98.03 billion (US$182.1 million), including CFAF 23.8 billion (US$44.2 million) vis-à-vis multilaterals and CFAF 21.05 billion (US$39.1 million) vis-à-vis government agencies and private creditors insured with companies from Paris Club member countries and from China [ICBC and China Construction Bank] CFAF 1.3 billion (US$2.42 million). The Government's strategy for the clearance of existing external arrears consists of focusing primarily on multilateral debt, bilateral debt, insured commercial commitments and seeking agreements with other creditors prior to the IMF Board meeting. Accordingly, we will clear the arrears vis-à-vis the multilaterals. We will also clear bilateral and commercial-insured arrears as follows: (i) Austria CFAF 6.83 billion (US$12.69 million); (ii) France CFAF 11.9 billion (US$22.11 million); (iii) Israel CFAF 2.23 billion (US$4.13 million); and Spain CFAF 0.09 billion (US$0.17 million). Regarding the other commercial arrears vis-à-cis AFREXIMBANK (CFAF 7.52 billion or US$13.97 million, and commercial non-insured vis-à-vis France CFAF 0.7 billion (US$1.24 million), Austria CFAF 8.71 billion (US$16.18 million), and Morocco CFAF 1.01 billion (US$1.87 million), we contacted these creditors individually to obtain from them the non-objection agreement. The same communication was made with China to which our bilateral payment arrears are about CFAF 34.01 billion (US$63.17 million).’ There are some indications that the China Eximbank loan for Phase 1 of the Kpong Water Expansion Supply Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears). Then, on December 19, 2022, the Government of Ghana announced a sovereign default, suspending debt service on its Eurobonds, its commercial loans, and most of its bilateral loans.

Additional details

1. The French project title is Projet de Conception et de Construction de la Route Conjonctive de Port-Gentil (FARASOL-MBEGA). The Chinese project title is Forasol-MBega段建設工程項目 or FM項目 or 承建的加蓬讓蒂爾港市出城公路Forasol-MBega段建設工程項目 or 加蓬让蒂尔港出城公路项目. 2. AidData has estimated the all-in interest rate (3.964%) by adding 3.2% to average 6-month LIBOR in December 2015 (0.764%). 3. The borrowing terms of the loan are drawn from https://www.assemblee-nationale.ga/39-travaux-du-parlement/303-journal-des-debats/306-premiere-session-ordinaire-2016/316-seance-pleniere-du-29-avril-2016/

Number of official sources

14

Number of total sources

19