China Eximbank provides $197.3 million loan for Selected Township Roads on the Copperbelt (85%) Project

On March 15, 2018., the Government of Zambia and the Export-Import Bank of China signed a $197,391,777.85 buyer’s credit (loan) agreement for the Selected Township Roads on the Copperbelt (85%) Project. The borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds of the loan to finance 85% of a $232,225,621 commercial contact between Zambia's Road Development Agency and AVIC International, which was signed in March 2017. The remaining 15% ($33,833,843.15) was to be directly funded by the Government of Zambia. As of July 2022, the China Eximbank loan had achieved a 69.6% disbursement rate ($137,543,803.90 out of $197,391,777.85). The scope of the project includes the engineering design, rehabilitation, upgrading and construction of approximately 152 km of selected township roads in Kitwe, Chingola and Mufulira districts within Copperbelt Province. The project also includes walkways, street lighting and traffic lights at selected junctions. AVIC International is the general (EPC) contractor responsible for implementation. Construction began on June 25, 2017 and the project was expected to reach completion within 36 months (June 25, 2020). By December 31, 2018, the project had achieved a 37% completion rate. By December 31, 2019, it had achieved a 95% completion rate. AVIC International halted construction in 2019, citing inconsistent disbursement of funds. The Government of Zambia disbursed $59 million of its own funding in response, while expressing disappointment in AVIC International’s failure to reach the 20% local contractor subcontracting requirement. The Road Development Agency’s 2020 work plan characterizes this project as ongoing. 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 ($59,847,973.95); 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. This project is also known as the ZTR 1 Project, the Zambia Township Roads (Lot 1) Project, the Copperbelt Province Urban Road Lot 1 Project, the 152 km of Township Roads in Kitwe, Chingola and Mufulira (Lot 1) Project, and the Kitwe, Chingola, and Mufulira, Copperbelt Province Urban Road Lot 1, 152 km Project. The Chinese project title is 铜带城市道路升级改造项目 or 铜带城市道路升 级改造项目 Lot1. 2. Due to the fact that the China Eximbank loan was used to finance 85% of the total cost of a commercial contract with AVIC International, AidData assumes that it was provided in the form of an export buyer’s credit. It is unclear if the export buyer’s credit is of a preferential nature or non-preferential nature. This issue warrants further investigation.

Number of official sources

11

Number of total sources

22