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

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.

Additional details

1. This project is also known as the Inter-Island Fiber Optic Network and National Backbone Project, the Huawei Submarine Cable Project, and the Auxiliary Submarine Cable Project. The Chinese project title is 援科摩罗电信国家光纤骨干传输网络项目 or 华为公司海底光缆项目 or 司海底光缆项目 or 我援科海底光缆优惠贷款项目 or 海底光缆优惠贷款项目. The French project title is Projet Cable Optique or Le Projet Eassy de câble marin à fibre optique. 2. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, this loan is identified as carrying a 30 year maturity length. However, AidData records a maturity length of 25 years based on a detailed description of the terms and conditions of the loan that is included in a 2011 Debt Management Performance Assessment (published by the World Bank). 3. On July 27, 2013, a presidential decree was issued, which created a special purpose vehicle called Comores Câbles and tasked it with financing, holding, rolling out, renting, and operating telecommunication networks on the Comoros territory. Comores Câbles was to supposed to take over all of Comores Télécom’s fiber optic cable assets (including the FLY-LION3 cable assets) and all of the corresponding responsibilities related to the landing for inter-island cable stations (maintenance, operation, safety, etc.). On November 15, 2016, the Ministry of Finance of Comoros confirmed the transfer of cable assets from Comores Télécom to Comores Câbles. However, it is unclear if Comores Câbles assumed any or all of Comores Télécom’s outstanding debt obligations to China Eximbank. This issue warrants further investigation. 4. The World Bank’s Debtor Reporting System (DRS) identifies the face value of the loan as $31,759,726.30.

Number of official sources

20

Number of total sources

35