China Eximbank provides RMB 215 million government concessional loan for National Fiber Optic Backbone Transmission Network Project

Project narrative

On December 2, 2010, the Export-Import Bank of China and the Government of Comoros signed an RMB 215 million ($31,759,726.30) government concessional loan (GCL) agreement for the National Fiber Optic Backbone Transmission Network Project. The face value of the loan was roughly equivalent to 5.5 percent of the country’s total GDP. The GCL carried the following borrowing terms: a 25-year maturity, a 5-year grace period, a 1% interest rate, a 0.5% management fee, and a 0.75% commitment fee. Then, on December 27, 2010, a Memorandum of Understanding (MOU) was concluded between the Government of Comoros and Comores Télécom (the country’s state-owned telecommunications operator), which transferred the loan agreement with China Eximbank to Comores Télécom. The MOU stipulates that the Government of Comoros will serve as the ultimately guarantor of the payment of the loan and assume responsibility for repayment in the event of default by Comores Télécom. Also, under the terms of the MOU, Comores Télécom pledges to (a) use the proceeds of the loan borrowed for two specific sub-projects (the Inter-Island Fiber Optic Network Sub-Project and National Backbone Sub-Project) and the improvement and expansion of national telecommunications infrastructure; (b) repay the amounts borrowed, plus interest, within the contractual timeframes and pay any other expenses that may be necessary for the execution of the agreement; and (c) make direct payments to China Eximbank and transmit a copy of the payment order to the Government of Comoros’ National Debt Directorate [Direction nationale de la dette DND]. No provisions were made in the MOU for a debt guarantee fee or obligation to transmit to the DND any information essential for monitoring the loan. Also, neither the DND nor the sector commission of the National Committee for Public Debt Management (CNDP) participated in the negotiations that resulted in this loan agreement. The purpose of this project was to increase connectivity between the islands of Grande Comore, Anjouan, and Mayotte in the Comoros Archipelago. The new 260-km cable project involved laying 2 fiber optic cables: one linking Mayotte to Mutsamudu on Anjouan Island (referred to as FLY-LION3), and another connecting Moroni to Chindini on Grand Comores (called the Avassa cable system). The landing party at Moroni, Chindini and Mutsamudu was Comores Télécom and STOI at Mayotte. Hengtong Marine Cable System Co. and Huawei Marine Networks Co. Ltd. were the contractors responsible for implementation. The first loan disbursement took place in 2015 and the project officially commenced on October 10, 2015. Then, on January 15, 2017, Huawei Marine Networks Co. Ltd. successfully delivered the new AVASSA submarine cable to Comores Télécom, which connected the Grande Comores and Anjouan Island with Mayotte. This effectively represented the completion date of the project.