China Eximbank pledges $177 million government concessional loan for Banjul Port Extension Project

Project narrative

In its 2015 Financial Statement and Annual Report, the Gambia Ports Authority (GPA) disclosed that it had signed an MOU with China Harbour and Engineering Corporation (CHEC) regarding the Banjul Port Extension Project and it intended to apply for a China Eximbank loan to finance this project. Then, on October 2, 2017, the Government of the Gambia’s Finance and Economic Affairs Minister Amadou Sanneh submitted an application to China Eximbank for a $177,077,885 government concessional loan (GCL) to support Banjul Port Extension Project. The proposed borrowing terms of the loan were as follows: a 2% interest rate, a 20 year maturity, and a 7 year grace period. The proceeds of the loan would be used to finance 100% of the cost of a commercial (EPC) contract with China Road and Bridge Corporation (CRBC). The Banjul Port Extension Project, if implemented, would install a new jetty, an approach bridge, channel dredging, maintenance of the dredging rehabilitation container terminal, a head office for use of the port authority, and repairs to the Banjul wharf. However, this project has been plagued by domestic controversy and it does not appear that a loan agreement with China Eximbank has been finalized. The Gambian Ministry of Justice questioned the legality of the Government of the Gambia’s contract with CRBC because it was issued without following standard competitive bidding procedures. Another concern that arose was the fact that a feasibility study for the project that was carried out by CRBC and it put the cost of the project at $123,697,885.77, yet the cost of the CRBC contract identified in the government’s loan application to China Eximbank was $177,077,885. This discrepancy of $53,380,000 prompted allegations that the contract price was artificially inflated. Then, on June 4, 2018, the Gambian Works Minister, Bai Lamin Jobe, convened a meeting with Secretary General, Habib Drammeh, GPA Board Chairman, Alpha Barry, MD, GPA, Abdoulie Tambadou and Permanent Secretary of Works, Mariama Ndure-Njie to discuss how the EPC contract with CRBC. At this meeting, the Gambian Works Minister reportedly decided not address four issues related to the EPC contract that were by flagged by external consultants (GAMWORKS and NIRAS Consulting Engineers of Denmark) but rejected by CBRC: concerns about the $177 million face value of the China Eximbank loan, the establishment of unit prices/rates after the completion of detailed project design work, the absence of a value-for-money analysis, and GPA requirements. The Gambia’s Permanent Secretary of the Ministry of Finance, Lamin Camara, also raised concerns with the Works Minister, Secretary General and the GPA Board Chairman, noting in email correspondence that ‘I MUST say once again that the country is not in position to absorb such a loan facility as it will eventually take us to a very serious level of debt unsustainability and would eventually make us miss our programs with the [IMF] and the [World Bank] and that may ultimately affect the gains we achieved in the Barrow government.’ He also warned that the ‘[China Eximbank] loan facility comprises of one fifth of the whole public debt of the country so there is no way it can be financed given the current situation’.