China Eximbank provides $248.8 million loan for Air Traffic Management System (ATMS) Project

Project narrative

On January 25, 2018, the Chinese Ambassador to South Sudan and the South Sudanese Finance Minister signed a preferential loan framework agreement. On the same day, the Government of South Sudan and China Eximbank signed a $248.8 million loan agreement for the Air Traffic Management System (ATMS) Project. The borrowing terms of the loan are unknown. However, it is known the borrower was expected to use the proceeds of the loan to finance a commercial (EPC) contract between South Sudan Civil Aviation Authority and China Harbor Engineering Company (CHEC) Limited, which was signed on October 14, 2016. This loan is reportedly secured by (collateralized against) airport fees/revenues that the borrower is required to deposit in a lender-controlled escrow account. The loan's amount outstanding was $237,000,000 as of December 31, 2021 and $231,952,567 as of December 31, 2022. The purpose of the project is to construct Juba ATMS center, a new Air Traffic control tower and operation building, a surveillance system, a navigation system, and a communication system. The Juba ATMS center is located next to Juba International Airport. The project also involves the civil engineering and supporting facilities required by the equipment (such as meteorological facilities), calibration flight test training, and other forms of training for South Sudanese technicians (to prepare them for management of the air space by 2023). CHEC is the EPC contractor responsible for implementation. Project implementation commenced in June 2020 and it was originally expected to reach completion by June 2023. On July 6, 2021, South Sudan Civil Aviation Authority (SSCAA) announced the launch of a state-of-the-art online system, which allows the opening of new routes. The newly established lower airspace, launched in partnership with aviation solutions provider NavPass, is designed to boost tourism and generate revenue for the economy, according to SSCAA. Through the system, operators of commercial, cargo, and aid aircraft can integrate Juba International Airport into their routes. "Through this partnership with NavPass, South Sudan will see higher volumes of aviation trade, greater business opportunities, and improved route efficiency, safety, and reliability," explained Capt. David Subek Dada, SSCAA's Chief Executive Officer (CEO). He added, "This marks a crucial step towards a more prosperous future for the whole of South Sudan through additional direct and indirect economic activity.” Speaking during the launch of the air traffic management system, Tom Perkins, the CEO of NavPass said the establishment of internationally compliant and globally accessible airspace was a critical and symbolic move for the country in building economic potential, connectivity, and business. "For every dollar invested in sovereign airspace, capacity translates into between five and 20 dollars of economic impact. We're proud to be working with governments across the world, including South Sudan, to optimize and monetize airspace, bridging the divide between nations," he noted. Built on the global-standard Performance-Based Navigation (PBN) system, South Sudan's airspace reportedly uses an AI-powered platform to record all flights in real-time. The system automatically collects more than 99% of eligible fees, compared with the 70-80% collected by some of the world's largest economies. NavPass chief executive, Thomas Perkins, said that apart from capturing the movement of all aircraft in the country’s skies in real-time, the technology will also automate the fee collection process with proceeds invested back into the country’s air infrastructure, in line with the United Nations’ International Civil Aviation Organization (ICAO) principles. The revenues that are collected will reportedly be transferred into an escrow account. There are some indications that the China Eximbank loan for the Air Traffic Management System (ATMS) Project has financially underperformed vis-a-vis the original expectations of the lender. In March 2023, the World Bank and the IMF judged the Government of South Sudan to be at a high risk of debt distress. Then, on June 14, 2023, South Sudan’s National Transport Minister Madut Biar on Wednesday revealed that CHEC had halted work its work on the ATMS Project due to delays in the payment of an outstanding bill worth $36 million. He said that the Government of South Sudan had a contractual obligation to pay CHEC $6.2 million every January 21 and July 21, but this did not happen because of a failure to pay by South Sudan's Ministry of Finance. Two weeks later, on June 27, 2023, the Chinese Government called upon the Government of South Sudan to expedite the payment of arrears for the construction of the country’s ATMS. Speaking to Radio Tamazuj during an interview, Mu Jianjun, the Economic and Commercial Counsellor in the Chinese Embassy in South Sudan, said that China Eximbank had halted the project and was waiting for the Government of South Sudan to pay the arrears for the works done before completing the construction of the country's ATMS. Mu Jianjun said “[w]e are waiting for payment from the Government of South Sudan and we suggested that the government pays as soon as possible because this project is very important for South Sudan."