China Eximbank provides preferential buyer's credit for Tire Plant Project in Angren Special Economic Zone

Project narrative

In August 2014, China Poly Group Corporation Limited signed a contract with Uzbekistan National Chemical Company to oversee the engineering, procurement, and construction of a $213.9 million tire plant in the Angren Special Economic Zone. This project was partially funded by a $156.37 million preferential buyer's credit (PBC) from China Eximbank to Asaka Bank (a majority state-owned commercial bank in Uzbekistan) and Birinchi Rezinotexnika Zavodi LLC (a special purpose vehicle and wholly-owned subsidiary of the Government of Uzbekistan). The PBC, which is captured via Record ID#54149, carried the following borrowing terms: a 20-year maturity, a 5-year grace period, and a 2% interest rate. The Government of Uzbekistan issued a sovereign guarantee for this loan. The project was reportedly financed according to a debt-equity ratio of about 70:30, with China Eximbank funding the debt portion. The Fund for Reconstruction and Development of Uzbekistan, O'zimyosanoat, O'zavtosanoat, the Navoi Mining and Smelting Plant, and Almalyk Mining and Smelting Plant reportedly funded the equity portion, although the breakdown of the $57.53 million equity portion is unknown. The purpose of the project was to construct a tire plant — known as the Birinchi Rubber Engineering Plant (BRZ) — in Angren Special Economic Zone. Upon completion, the plant's production capacity was originally expected to be 3 million car tires, 200,000 agricultural tires, and 100,000 linear meters of conveyor belts for cleaning equipment per year. China Poly Group Corporation Limited and CITIC Construction Co., Ltd. were the contractors responsible for project implementation. All production equipment and processes were sourced from China. Construction began on August 28, 2015 and was expected to last 34 months. The first tire was produced on trial on September 1, 2017, and production gradually increased during the end of 2017. The project was officially completed on July 25, 2018. However, the tire plant and the loan that supported its construction underperformed vis-a-vis their original expectations. In 2020, the Government of Uzbekistan provided an emergency loan worth 40 billion soums (about $4 million) — through its Anti-Crisis Fund — to keep the tire plant financially afloat. Then, in September 2021, the Deputy Speaker of the Legislative Chamber of Oliy Majlis, Alisher Kadyrov, revealed that the tire plant was only operating at 15% capacity. On January 20, 2023, Uzkimyosanoat JSC signed an agreement to sell a 100% equity stake in the tire plant to Tatneft of Russia for 826.57 billion soums.