ICBC provides $36 million loan for Phase 3 of Lusaka Urban Roads (L400) Project (Linked to Project ID#57190, #31329, #57218)

In January 2017, the Industrial and Commercial Bank of China (ICBC) and the Government of Zambia signed a $36,165,914 loan agreement for Phase 3 of the Lusaka Urban Roads (L400) Upgrade Project (captured via Project ID#57194). Then, on March 15, 2018, China Eximbank and the Government of Zambia signed a $204,940,174.80 loan agreement for Phase 3 of the Lusaka Urban Roads (L400) Upgrade Project (captured via Project ID#57190). The borrowing terms of these loans are unknown. The proceeds of the China Eximbank loan were to be used by the borrower to finance 85% of the cost of a $241,106,088 commercial contract between the Road Development Agency (RDA) of Zambia and AVIC International Project Company Limited, which was signed in October 2016. The proceeds of the Industrial and Commercial Bank of China (ICBC) loan were to be used by the borrower to finance 15% of the cost of the same commercial contract between the Road Development Agency (RDA) and AVIC International Project Company Limited. As of July 2022, the China Eximbank loan had achieved a 34.1% disbursement rate ($69,888,074.40 out of $204,940,147.80). The purpose of Phase 3 was to upgrade 116 km of urban roads in Lusaka and a number of street and signal lights. The construction of a dual carriageway from the Kenneth Kaunda International Airport to the airport traffic circle was also added to project scope. AVIC International Project Company Limited appears to have served as the general (EPC) contractor responsible for project implementation. However, Henan Overseas Engineering Construction Co., Ltd (HOEC) was also involved in implementation. Construction began in June 2017, and the project was originally expected to reach completion in 2021. It ultimately reached completion on December 18, 2020. The project ultimately resulted in the surfacing of approximately 144 km of roads. On July 29, 2022, the Ministry of Finance & National Planning (MOFNP) of Zambia announced that it was seeking lender approval to formally cancel the China Eximbank loan’s undisbursed balance of $135,052,100.40; however, it also noted that it had not yet secured formal lender approval for this action. This announcement came approximately 21 months after the Government of Zambia defaulted on its repayment obligations to Eurobond holders and approximately 6 weeks after China, France, and 14 other countries formed a creditor committee to discuss the Zambian authorities’ request for a debt treatment under ‘the Common Framework for Debt Treatment beyond the DSSI’ endorsed by the G20 and the Paris Club.

Additional details

1. SAIS-CARI identifies China Jiangxi Corporation for International Economic and Technical Cooperation (CJIC) as the contractor responsible for implementation. However, multiple official sources (including MOFCOM and HOEC) identify AVIC and HOEC as the contractors responsible for implementation. 2. In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI records Bank of China rather than ICBC as the source of the $36 million loan for Phase 3. AidData records ICBC as the source of the loan because Chief Government Spokesperson Dora Siliya explicitly identified ICBC as the lender in a 2018 public announcement. 3. In 2013, China Eximbank provided a loan for Phase 1 of the L400 Project (captured via Project ID#31329). In 2016, China Eximbank provided a loan for Phase 2 of the L400 Project (captured via Project ID#57218). 4. This project is also known as the Lusaka Urban Road (L400) Upgrade, 400 km, Phase III Project. The Chinese project title is 卢萨卡城市交通系统升级改造(L400)项目三期 or 赞比亚L400市政道路升级改造三期项目. 5. The entire L400 project involves the construction of 408 kilometers of road, one grade-separated junction, and 90 kilometers of walkways, as well as the re-engineering 10 junctions in the capital city and province of Lusaka. Phase 2 and Phase 3 of the L400 project appear to have some overlap, including in the rehabilitation of Lumumba road, which is quoted by Zambia's Road Development Agency (RDA) as being included in Phase 2 construction, but appears to have been financed with the $241 million used in Phase 3.

Number of official sources

12

Number of total sources

24