China Eximbank provides $143.85 million preferential buyer’s credit for Urban Infrastructure Development AJK Package 1 (Linked to Record ID#71792)

Project narrative

On June 18, 2009, China Eximbank signed two different preferential buyer’s credit (PBC) agreements: a $143,850,000 PBC agreement [CHINA EXIMBANK PBC NO. (2009) 12 TOTAL NO. (74)] for Urban Infrastructure Development (UDP) Azad Jammu and Kashmir (AJK) Package 1 Project (captured via Record ID#53872) and a $156,147,000 PBC agreement [CHINA EXIMBANK PBC NO. (2009) 13 TOTAL NO. (75)] for Urban Infrastructure Development (UDP) Azad Jammu and Kashmir (AJK) Package 2 Project (captured via Record ID#71792). Both of these loans were reportedly provided on the following borrowing terms: 20 year maturities and 1.5% interest rates. The AJK Urban Development Programme (Packages 1 and 2) aimed to provide safe housing, improved city environment, and modern physical and social infrastructure in the earthquake affected areas with Azad Jammu and Kashmir Province. The AJK Urban Development Programme (Packages 1 and 2) involved 235 urban development works (sub-projects) in the earthquake-affected areas of Muzaffarabad, Bagh (also known as Bagh City), Rawalakot within Azad Jammu and Kashmir Province. 90 rehabilitation sub-projects (worth $190 million) were to take place in Muzaffarabad. 50 rehabilitation sub-projects (worth $123 million) were to take place in Bagh. 30 rehabilitation sub-projects (worth $38.83 million) were to take place in Rawalakot. China Beixin Construction & Engineering Company and China International Water & Electric Corp. were the contractors responsible for implementation of the Urban Infrastructure Development AJK Package 1 Project and the Urban Infrastructure Development AJK Package 2 Project. Both projects and contractors were overseen by Pakistan’s Earthquake Reconstruction and Rehabilitation Authority (ERRA). As of October 2013, 10 sub-projects had been completed, 47 were under construction, and 178 were yet to be started. The originally expected completion date for both projects was December 31, 2016. Both packages were completed but their precise dates of completion are unknown. There are some indications that the China Eximbank preferential buyer’s credit for the Urban Infrastructure Development AJK Package 1 Project financially underperformed vis-a-vis the original expectations of the lender. On or around July 1, 2020, China Eximbank and the Government of Pakistan signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2020 and December 31, 2020 under the preferential buyer’s credit agreement for the Urban Infrastructure Development AJK Package 1 Project. Then, on November 19, 2020, China Eximbank and the Government of Pakistan signed another debt suspension agreement [No. DSSI2021PHASE1-036]. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between January 1, 2021 and June 30, 2021 under the preferential buyer’s credit for the Urban Infrastructure Development AJK Package 1 Project. Then, on or around July 1, 2021, China Eximbank and the Government of Pakistan signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the preferential buyer’s credit for the Urban Infrastructure Development AJK Package 1 Project. The debt service suspension (rescheduling) from July 2020-December 2020 is captured via Record ID#96254. The debt service suspension (rescheduling) from January 2021-June 2021 is captured via Record ID#96247. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Record ID#96253.