China Eximbank provides $337.1 million preferential buyer's credit for National Broadband Network Phase II Project (Linked to Project ID#31253)

On October 30, 2015, the Government of Cameroon released a presidential decree authorizing the Ministry of the Economy, Planning, and Regional Development to sign a preferential loan agreement with China Eximbank for the National Broadband Network Phase 2 Project. The date of the signing agreement was also the first date of disbursement, which was $47,728,395. Then, on December 8, 2015, China Eximbank and Cameroon’s Ministry of Economy, Planning, and Regional Development (MINEPAT) signed a $337,121,984.15 (CFA 199 billion) preferential buyer credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2015) 1 TOTAL NO. (343)] for the National Broadband Network Phase 2 Project. The borrowing terms of the PBC were as follows: a 20 year maturity, a 5 year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0.25% commitment fee, and a 0.25% management fee. The proceeds of the PBC were on-lent to Cameroon Telecommunications (CAMTEL) to finance its $396,614,099 commercial contract with Huawei Technologies Co., Ltd, which was signed on June 17, 2013 and amended on October 24, 2014. As of December 31, 2020, the loan had achieved a 100% disbursement rate and its outstanding amount was equivalent to CFA 180.3 billion. Its outstanding amount was equivalent to CFA 31 billion as of December 31, 2016, CFA 110 billion as of December 31, 2017, CFA 135 billion as of December 31, 2018, and CFA 193 billion as of December 31, 2019. The purpose of the project was to add an additional 3,000 km to an existing fiber optic network in 13 cities. Huawei Technologies Co., Ltd was the contractor responsible for project implementation. The project had achieved a 90.27% completion rate as of 2019. The originally expected project completion date of the project was June 8, 2020. There are some indications that the China Eximbank loan for the National Broadband Network Phase II Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements. Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Project ID#88213). Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed). Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress. Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project. He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding. He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’

Additional details

1. The Chinese project title is 喀国家通信宽带网项目. The French project title is la deuxième phase du projet de construction d'un Réseau national Broadband des Télécommunications au Cameroun. 2. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it does not record the borrowing terms for this China Eximbank loan. AidData records the borrowing terms (20 year maturity, 5 year grace period, 2% interest rate) that are contained in the actual loan agreement [CHINA EXIMBANK PBC NO. (2015) 1 TOTAL NO. (343)] supporting the project. Also, SAIS-CARI records the loan as a government concessional loan (GCL). However, the loan agreement clearly states that it is a preferential buyer's credit (PBC). 3. The loan agreement can be accessed in its entirety via SourceID#68662 or https://www.documentcloud.org/documents/20487977-cmr_2015_186. 4. The project ID number for this transaction in Cameroon's Development Assistance Database (DAD) is CAM/000932. 5. China Eximbank also financed Phase 1 of this project (captured via Project ID#31253). 6. The loan identification number in the Government of Cameroon's Commonwealth Secretariat Debt Recording and Management System (CS-DRMS) is 2015134.

Number of official sources

8

Number of total sources

17