China Development Bank provides a $1.5 billion USD loan for Phase 1 of the Astana Light Rail Construction Project (Linked to Project ID#53932)

On May 7, 2015, China Railway International Group Co., Ltd., a wholly-owned subsidiary of China Railway, and Beijing State-Owned Assets Management Co., Ltd. signed an engineering, procurement, and construction (EPC) agreement with Astana LRT LLP (ТОО «Астана LRT») for Phase 1 of the Astana Light Rail Construction Project (see 'А. Джаксыбеков: Внедрение LRT станет основополагающим элементом новой транспортной системы Астаны'). Then, on August 31, 2015, China Development Bank (CDB) signed a $1.5 billion USD loan agreement with Astana LRT LLP for the project (see signing date at 'Встреча с Председателем КНР Си Цзиньпином в расширенном составе'; see loan amount at 'Как будут реализовываться поручения Президента РК Все права защищены. Используйте активную ссылку на'). The loan carried the following terms: a maturity period of 20 years, a grace period of two years, and an interest rate of LIBOR + a 2.5% margin. The Government of Kazakhstan provided a sovereign guarantee for the loan (see LIBOR rate at 'Как будут реализовываться поручения Президента РК Все права защищены. Используйте активную ссылку на'; see rest at 'Почему Китай прекратил финансирование проекта LRT в Казахстане и что будет со 100 млрд тенге из кредита?').Astana LRT LLP, a project company (special purpose vehicle) owned by the City of Astana, was established in April 2011 for the purpose of building a light rail system in Astana, the capital of Kazakhstan (see 'Почему Китай прекратил финансирование проекта LRT в Казахстане и что будет со 100 млрд тенге из кредита?'). The Government of Kazakhstan and the City of Astana had previously attempted to construct light rail in the city that year; a consortium of companies led by Alstom were awarded a turnkey contract and the President of Kazakhstan Nursultan Nazarbayev laid the foundation stone on July 4, 2011. The project was scheduled to be completed in December 2013 (see 'President launches construction of Astana light rail line'). However, it was shelved due to high costs, only to be revived by the participation of Chinese companies (see 'Kazakh president orders investigation into China-linked transport project').The project involved the construction of a 22.4 km light rail system with 18 stations that run from Nursultan Nazarbayev International Airport to the Astana Nurly Zhol railway station. The light rail was to connect Nazarbayev University, Abu Dhabi Plaza, and House of Ministries. The rolling stock of 19 light rail vehicles (LRVs) were to be supplied by a Chinese company. The LRVs were to be 31.5 meters long and able to travel at an average speed of 40 km/hr. The estimated average daily ridership of Phase I was 150,000 passengers (see 'Project Update'). The light rail was intended to handle the traffic problems of Astana with comfortable and safe public transit (see 'CAPITAL TRANSPORT STRATEGY...'). The project was estimated to cost $1.8 billion USD (see 'Astana to begin light rail system construction in May').China Railway Asia-Europe Construction Investment Co., Ltd. was part of the implementation consortium, alongside Beijing State-Owned Assets Management Co., Ltd., China Railway No.2 Engineering Group Co., Ltd. SYSTRA was the project management consultant, PricewaterhouseCoopers International Limited was the legal consultant, and Bureau Veritas provided technical supervision (see 'Почему Китай прекратил финансирование проекта LRT в Казахстане и что будет со 100 млрд тенге из кредита?'). China Construction Sixth Engineering Bureau Co., Ltd., China Railway No. 2 Group Co., Ltd., and Beijing Urban Construction Group Co., Ltd. were also assigned different sections to build (see '一带一路·好项目｜哈萨克斯坦阿斯塔纳轻轨项目').When the EPC was signed in May 2015, the project was expected to be completed before the Astana Expo, which was scheduled to run from June 10 to September 10, 2017. However, the project fell behind schedule due to financial issues (see 'Kazakhstan light rail loan agreement sealed'). Construction began on May 22, 2017 (see 'Astana light rail construction begins'). At that time, construction of the light rail system was expected to be completed by December 31, 2019, with rides on the light rail set to begin in summer 2020 (see 'Почему Китай прекратил финансирование проекта LRT в Казахстане и что будет со 100 млрд тенге из кредита?'). However, as of July 2018, only 23% of the project was completed; the project had encountered many problems and delays (see 'Project Update').CDB lent to Astana LRT LLP, which in turn deposited the proceeds from the first tranche of the CDB loan in an account with the Bank of Astana. However, these funds were not disbursed for use in the Astana Light Rail Construction Project. Then, less than a month before the National Bank of Kazakhstan, Kazakhstan's central bank, revoked the Bank of Astana's license in September 2018, the liability for the deposit was transferred to Kazakhstan's Ministry of Finance's Problem Loan Fund. CDB halted funding for the project in October 2018; the mayor's office in Astana explained that 'one factor' in CDB's decision to halt lending was that $258 million USD of the $313 million USD it had disbursed had not been spent on the project. The Government of Kazakhstan pledged to repay CDB, but as of February 2019, the Ministry of Finance's Problem Loan Fund had only released ₸3.3 billion KZT ($8.6 million USD) to Astana LRT LLP to pay Chinese contractors (see 'China's $1.9 Billion Belt-and-Road Rail Project Goes Off Track'). In spring 2019, project construction was put on hold as the City of Astana and CDB could not agree on the terms of the next loan tranche (see 'Kazakh president orders investigation into China-linked transport project').Then, in October 2019, President of Kazakhstan Kassym-Jomart Tokayev ordered a thorough anti-corruption investigation into former senior officials who initiated the Astana Light Rail Construction Project. These officials included the former mayors of the City of Astana and the former chief executive of Astana LRT LLP, who fled Kazakhstan and was under investigation for potential embezzlement of project funds. As for the project itself, Tokayev called it 'economically incomprehensible' and stated that 'I do not understand how it could have been launched.' However, because the costs of backing out were severe, Kazakhstan decided to continue with the project, with new financing (see 'Kazakh president orders investigation into China-linked transport project').The Astana Light Rail Construction Project is now being financed by domestic bonds; bonds worth $344 million USD were to be used to repay the loan from CDB and the remaining was to be used for $1.2 billion USD. In July 2018, Kazakhstan's Ministry for Development and Investments announced plans to allocate $47.2 million USD for the Astana Light Rail project (see 'Project Update'). Rather than cancelling the loan to Astana LRT LLP altogether, CDB reduced its face value to approximately $344 million USD and revised the borrowing terms such that the maturity was reset to 5 years and the interest rate was reset to 3% (see 'Как будут реализовываться поручения Президента РК Все права защищены. Используйте активную ссылку на'). The revised project is now planned to have only 11 stops. In September 2019, Kazakhstan repaid the $344 million USD principal and accrued interest off early via the bonds (see 'Kazakhstan ends infrastructure financing from China...').

Additional details

This project, which is also known as the Nur-Sultan Light Metro project (reflecting Astana's new name, Nur-Sultan, as of March 2019), is linked to Project ID#53932. which captures agreements signed between China and Kazakhstan, including this CDB loan. The Chinese project title is 哈萨克斯坦阿斯塔纳轻轨项目. The End_planned field was coded as June 9, 2017, because this was the last day before the Astana Expo. The LIBOR rate was not specified; AidData has assumed a 6-month LIBOR. The 6-month LIBOR in August 2015 was 0.519%. Therefore, the interest rate was coded as 0.519%+2.5%, or 3.19%.

Number of official sources

9

Number of unofficial sources

29