China Eximbank provides RMB 1 billion government concessional loan for Phase 2 of Kribi Deep Sea Port Project (Linked to Record ID#53396 and #350)

Project narrative

On January 19, 2016, China Eximbank expressed its willingness to finance Phase 2 of the Kribi Deep Sea Port Project. Then, on April 5, 2017, China Eximbank formally issued a $675.5 million ‘mixed credit’ to the Government of the Republic of Cameroon for Phase 2. It provided an RMB 1 billion government concessional loan (GCL) (captured via Record ID#53116) and a $524,579,992 preferential buyer's credit (PBC) loan (captured via Record ID#53396). The GCL carried the following borrowing terms: a 20 year maturity, a 2% interest rate, and a 7 year grace period. The PBC carried the following borrowing terms: a 22 year maturity, a 2% interest rate, and a 11 year grace period. Both loans were collateralized with the revenues of the Autonomous Port of Kribi, which were to be deposited by the borrower into a CFA franc revenue account (known as the ‘control account’), and a minimum cash balance in a separate escrow account (compte séquestre). Under the terms of a June 2017 Repayment Mechanism Agreement with China Eximbank and Banque Atlantique (the Escrow Agent), the borrower was expected to deposit all project (port) revenues in the control account and maintain a minimum cash balance in a separate escrow account (compte séquestre) equivalent to two, semi-annual debt service (principal, interest, and fee) payments. The proceeds of the GCL and the PBC were to be used by the borrower to finance a commercial contract between China Harbour Engineering Company Limited and Cameroon's Ministry of Economy, Planning and Regional Development (MINEPAT). As of December 31, 2020, the GCL had achieved a 21.1% disbursement rate (with an undisbursed balance of CFA 64.9 billion) and its amount outstanding was equivalent to CFA 17.3 billion. As of December 31, 2020, the PBC had achieved a 25.6% disbursement rate (with an undisbursed balance of CFA 200.9 billion) and its amount outstanding was equivalent to CFA 31.4 billion. According to the Cameroon Ministry of Finance, in 2023 the total disbursement amount for the Phase II Kribi Deep Sea Port Project was USD 9,697,000 (via Record ID#211630). Phase 2 involved the construction of a 1,102m long quay, the expansion of the container terminal from 700m to 1,050m, and the addition of both an ore and oil terminal. China Harbour Engineering Company Limited was the contractor responsible for implementation. Phase 2 of the project was intended to last 36 months and achieve completion in 2023. Phase 1 was completed in 2014. Construction for Phase 2 began in 2019 and was completed on February 21, 2025. There are some indications that the China Eximbank loan for Phase 2 of the Kribi Deep Sea Port Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements. Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213). Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed). Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress. Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project. He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding. He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’ However, in its 2023 annual report, La Caisse Autonome d'Amortissement du Cameroun (CAA) noted that the borrower had complied with the minimum account balance requirement under its Repayment Mechanism Agreement for Phase 2 of Kribi Deep Sea Port Project with China Eximbank.