China Eximbank provides $326.4 million preferential buyer’s credit for the Southern Coastal Highway Improvement Project

Project narrative

On February 16, 2017, the Export-Import Bank of China and the Government of Jamaica signed a $326,400,000 preferential buyer’s credit (PBC) agreement for the Southern Coastal Highway Improvement Project. According to internal records that Jamaica’s Ministry of Finance and the Public Service supplied to AidData in May 2020, the loan carried the following borrowing terms: a maturity period of 20 years, a grace period of 5 years, an interest rate of 3%, a commitment fee of 0.5%, and a management fee of 0.35%. The first scheduled date of loan repayment was January 21, 2022 and the final date of scheduled loan repayment was January 21, 2037. As of October 30, 2021, the loan had achieved an 27.3% disbursement rate ($89,238,535.16 out of $326,400,000). Its outstanding amount was $89,238,535.16 as of October 30, 2021. The borrower was expected to use the loan proceeds to finance a commercial contract that it signed with China Harbour Engineering Company (CHEC) in 2016. The Southern Coastal Highway Improvement Project (SCHIP) has four core objectives: (1) Construction of a 16km, 4 lane highway with safety barriers from Harbour view to Yallahs, to be undertaken by CHEC at a cost of $110 million; (2) Rehabilitation of 96 km of road from Yallahs Bridge in St. Thomas to Port Antonio, in Eastern Portland, along the existing road alignment to reduce corners, improve safety and open up access to lands which may be of touristic value. This work will be administered by Jamaica's National Works Agency (NWA) and executed by local contractors under subcontract from CHEC at a cost of $74 million; (3) Rehabilitation of 26 km of roads from Morant Bay to Cedar Valley along the existing road alignment to reduce corners, improve safety and open access to lands which may be of touristic, housing or agricultural value. This work will be administered by the NWA and executed by local contractors under subcontract from CHEC at a cost of $11.4 million; and (4) The extension of the East West Toll Road from May Pen to Williamsfield, just outside Mandeville at a cost of $188.5 million. China Harbour Engineering Company (CHEC) is the contractor responsible for project implementation. Project implementation commenced on November 17, 2019. However, the project has encountered various delays and problems. In June 2022, Jamaica’s Minister of Ministry of Economic Growth and Job Creation, Hon. Everald Warmington, said that dust and the slow pace of work were major complaint of local residents, especially those living in St. Thomas. He told a group of journalists on June 2, 2022 that ‘some subcontractors are not living up to the responsibility of their contract… [and] where [they] are negligent then [CHEC] will step in and have those rectified.’ He also noted that the the commercial contract ‘makes it clear that where the subcontractor is insufficient in performance, [CHEC] is obligated to step in and do the work itself.’ At the same time, he expressed hope that subcontractors, many of whom are from Jamaica, would improve their performance to prevent CHEC from reassuming control for all project components. As of March 2025, the project is 95% complete and expected to be completed by March 2027.