CDB provides $22 million loan for Cimerwa Cement Plant Expansion Project

Project narrative

In 2012, Trade Development Bank, Bank of Kigali, East African Development Bank (AfDB), KCB Rwanda, Ecobank Rwanda, and I&M Bank Rwanda offered a $93.7 million syndicated loan to CIMERWA -- Rwanda’s only integrated cement producer -- to replace the company’s existing 100,000 tons per year cement plant and establish a new cement plant with an installed capacity of 600,000 tons per year. China Development Bank (CDB) provided a $22 million loan -- through an inter-bank loan agreement with Kigali Bank -- in support of the project. The two-year construction contract was awarded to the China Aviation Technology International Engineering Cooperation. On January 17, 2013, a groundbreaking ceremony was held for the project. The total project cost is $114.2 million. The project was officially completed on August 21, 2015. CIMERWA was established in 1982 and is located in Bugarama, in Rusizi district, on the South Western border of Rwanda. It is the only cement company in Rwanda that mines raw materials, produces clinker concentrate, and packs and sells cement for general and civil construction. Some of its products are exported to the Democratic Republic of the Congo (DRC) and Burundi. It was originally constructed with support from the Chinese Government in the 1970s and 80s. In July 1976, the Rwandan Government established a joint venture with the Chinese Government to construct a cement production plant. As part of the agreement, the Chinese government offered a 30‐year, 13 million USD interest‐free loan (Gathani and Stoelinga, 2013). In 1984, the CIMERWA plant was commissioned; it was managed by China Building Material Industrial Corporation For Foreign Econo-Technical Cooperation (CBMC) under a ‘build, own, operate and transfer’ (BOOT) agreement. The plant had an initial capacity of 50,000 tons per year. In 2001, CBMC re‐invested to expand the plant, doubling its production capacity to 100,000 tons per year. In 2006, the Chinese Government loan expired and the government chose to privatize the company. Rwanda Investment Group (RIG) — an informal investment group, co‐owned by several RPF‐allied local investors — took a 90 percent ownership stake in CIMERWA. RIG had promised to build a new cement plant but did not deliver. One reason for the lack of activity was that one of RIG's leading investors, Tribert Rujugiro, left Rwanda because of tax evasion and money laundering charges. He later fell out with President Kagame and his Rwandan properties and businesses were seized after he was accused of funding the RPF's opposition‐in‐exile. In the late 2000s, CIMERWA was ‘in a bad situation since the plant was old and maintenance costs were high’. In 2010, the AfDB indicated that it would provide a $130 million loan to CIMERWA to construct a new plant. However, it later backed out of the deal and CIMERWA contracted a syndicated loan (with Trade Development Bank, Bank of Kigali, East African Development Bank, KCB Rwanda, Ecobank Rwanda, and I&M Bank Rwanda). Then, in 2011, the Rwanda Social Security Board (RSSB) and the Government of Rwanda took majority control of CIMERWA, leaving RIG with 21.2 percent of shares. In January 2013, South Africa's largest cement producer, PPC Ltd, invested $69 million to assume a 51 percent (majority) ownership stake in CIMERWA. RSSB, the government, and RIG still retained shares. Since PPC assumed majority ownership, CIMERWA has invested $170 million in a new dry process production plant with a capacity of 600,000 tons of cement per year.