Bank of China contributes to $85.7 million buyer’s credit for restoration and improvement of 3 highways (Linked to Project ID#38936)

On March 31, 2015, the Government of Ecuador signed a $85.71 million syndicated buyer’s credit loan agreement with the Panama Branch of Bank of China Limited ($60 million commitment) and the Hong Kong Branch of Deutsche Bank AG ($25.7 million commitment) for the restoration and improvement of 3 highways in Ecuador. The loan carried the following borrowing terms: an annual interest rate of 6-month LIBOR plus a 3.5% margin, a maturity of 13 years, and a 3-year grace period. The loan also benefited from a Sinosure credit insurance policy, which covered political and commercial risks for the loan’s principal amount plus accrued risk (with a 95% indemnity ratio for the buyer’s credit facility). The proceeds of the loan were to be used by the borrower to finance up to 85% of the total cost of a $100,835,385.77 commercial contract [RE-28-3OB-MTOP-2014] between the Government of Ecuador’s Ministry of Transportation and Public Works (MTOP) and a consortium consisting of China Civil Engineering Construction Corporation Ltd. (CCECC) and Verdú S.A., which was signed on March 17, 2015. The loan’s (principal) outstanding amount was $53,193,335.61 as of December 31, 2021 and $45,009,745.51 as of November 30, 2022. The purpose of the project was to (a) restore and improve the 24 km Sigchos—Chugchilán highway, (b) restore and improve the 80.85 km Buena Vista—Vega Rivera—Paccha—Zaruma Highway Buena Vista—Vega highway (and thereby connect the E25 road axis and the towns located in the upper part of the province of El Oro), and (c) widen Ordoñez Lasso avenue, which serves as a link between the E25 and E35 corridors and connects the provinces of Azuay, Guayas, and El Oro. The Ordoñez Lasso avenue widening project component consists of two sections: one that runs from Las Américas avenue to the Ciudad de Cuenca school and another that runs from the Ciudad de Cuenca school to Sayausi. China Civil Engineering Construction Corporation Ltd. (CCECC) and Verdú S.A. (an Ecuadorian company) were the contractors responsible for project implementation. Construction began on June 18, 2015 after an advance payment (worth 15% of the commercial contract value) was made to CCECC and Verdú S.A. As of September 2018, the restoration and improvement of the 24 km Sigchos—Chugchilán highway was complete and the 80.85 km Buena Vista—Vega Rivera—Paccha—Zaruma Highway Buena Vista—Vega highway had achieved a 100% completion rate; however, the widening of Ordoñez Lasso avenue had only achieved an 85% completion rate. The project was originally scheduled to reach completion on June 18, 2017.

Additional details

1. The Spanish project title is "El proyecto de 3 carreteras en el país" or "La rehabilitación y mejoramiento de la carretera Sigchos – Chugchilán y la ampliación de la avenida Ordoñez Lasso, en la provincia de Azuay; y la rectificación y mejoramiento de la arteria vial Buena Vista – Vega Rivera – Paccha – Zaruma, ubicada en El Oro". 2. The all-in interest rate was estimated by adding 3.5% to the average 6-month LIBOR rate in March 2015 (0.399%). 3. One official source refer to the value of the commercial contract as $100,868,000 and the contract signing date as April 9, 2015. This issue warrants further investigation. 4. Ashurst served as a legal adviser on the transaction. 5. The Ecuadorian Ministry of Finance loan identification number is 28093000.

Number of official sources

17

Number of total sources

23