China Eximbank provides RMB 304 million government concessional loan for the 30MW Wadadli Power Plant Construction Project (Linked to Record ID#54574)

Project narrative

During the second half of 2006, the Prime Minister of Antigua and Barbuda, and others on behalf of the Government of Antigua and Barbuda and Antigua Public Utilities Authority (APUA), reportedly began discussions with Beijing Construction Engineering Group Co. Ltd (BCEG) about the possibility installing power generators in Antigua. These negotiations resulted in a memorandum of understanding (MOU) between APUA and BCEG signed on November 11, 2006. Then, on May 21, 2008, the Chinese Government and the Government of Antigua and Barbuda signed a preferential loan framework agreement for the 30MW Wadadli Power Plant Construction Project. Then, on June 26, 2008, China Eximbank and the Government of Antigua and Barbuda signed an RMB 300,000,000 (EC$ 117,690,000) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL No. (2008) 15 TOTAL NO. (234)] for the 30MW Wadadli Power Plant Construction Project. The GCL carries the following terms: a 2% interest rate, a 0% default (penalty) interest rate, a 20.75 year maturity, a 5 year grace period, a 0.6% management fee, and a 0.5% commitment fee. The GCL’s final maturity date is March 21, 2029. The proceeds of the loan were to be used by the borrower to finance a commercial contract between APUA and BCEG, which was signed on March 11, 2008. The loan's (principal) amount outstanding was EC$ 71,172,774 (or approximately RMB 167,759,220) as of September 2020. The purpose of the project was to construct the 30MW Wadadli power plant — with six 5MW generators — in Crabbs, Antigua. Beijing Construction Engineering Group Co. Ltd. was the contractor responsible for project implementation. A groundbreaking ceremony was held on October 2, 2008. The project was officially completed and handed over to the local authorities on September 8, 2011. Then, in 2012, the plant stopped working due to consistent overheating. Allegations arose that the power plant engines were used, rather than the new engines that Beijing Construction Engineering Group Co. Ltd. had promised. Another allegation emerged: that the engines only cost RMB 147 million and that the additional RMB 157 million was never allocated or misappropriated. The power plant already had rusting before the point of its commissioning in 2011 and it was decommissioned five years later (in 2016). Three of the units were brought back into use in 2017 at the cost of $6 million. However, one of the units failed again several years later. In September 2020, APUA’s Electricity Business Unit Manager, Andre Matthias, announced that the power plant would be closing due to the conditions of the plant itself and its underperformance. In September 2020, the outstanding balance of the China Eximbank loan was EC$71,172,774 (or approximately RMB 167,759,220), which prompted questions and concerns about how the loan would be repaid in the absence of electricity sales from a functioning power plant. Antigua and Barbuda’s Information Minister Melford Nicholas said in September 2020 that ‘It is a tricky issue because as you would know the government enjoys a very good bilateral relationship with the People’s Republic of China and this represents a blot, represents a terrible outcome in terms of what should have been an effective developmental support for the infrastructure in the country. It really is a bad situation. […] I think the most that can happen now is for both parties to have a conversation as to what happens to the outstanding arrears and the debt that has been incurred and whether or not consideration will be given for it to be written off […] and whether or not there is a methodology of converting the debt into another form of development but it is not something that is an easy road to tread. […] We do not want to necessarily impair that relationship with the government of China and allow this particular issue to impair the relationship but clearly we have not gotten value for money […] and so something needs to be done and we will engage them effectively so that we can come to some sort of compromise.’