China Eximbank provides RMB 96.9 million government concessional loan for Phase 3 of National Transmission Backbone and e-Government Infrastructure Project (Linked to Project ID#53401 and Project ID#53402)

On March 31, 2015, the Chinese Government and the Government of Uganda signed a preferential loan framework agreement for Phase 3 of the National Transmission Backbone and e-Government Infrastructure Project. On the same day, China Eximbank and the Government of Uganda (represented by the Ministry of Finance, Planning, and Economic Development) signed an RMB 96,966,600 ($15,391,522) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2015) 4 TOTAL NO. (543)] for Phase 3 of the National Transmission Backbone and e-Government Infrastructure Project. The Government of Uganda’s Ministry of Finance, Planning, and Economic Development then on-lent the proceeds of the GCL to National Information Technology Authority Uganda (NITA-U). The borrowing terms of the GCL 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 GCL is secured by (collateralized against) a minimum cash balance in a lender-controlled bank account (see staff comment #6 for more details). The proceeds of the GCL were to be used by the borrower to finance a $15,391,522 commercial (turnkey) contract [ID#0008000610060C] between the Government of Uganda’s Ministry of Information and Communication Technology and Huawei Technologies Co., Ltd., which was signed on July 15, 2010 and amended on December 30, 2013. According to the Government of Uganda’s Aid Management Platform (AMP), this loan achieved a 94.8% disbursement rate, with China Eximbank making x loan disbursements (worth $14,604,878.74) between 2015 and 2017: a $4,619,644.65 disbursement on September 30, 2015, a $5,192,303.56 disbursement on September 30, 2016, a $2,145,289.98 disbursement on April 19, 2017, a $2,553,844.51 disbursement on June 28, 2017, and a $93,796.05 disbursement on December 21, 2017. According to the Uganda Ministry of Finance, Planning, and Economic Development's Report on Public Debt, Grants, Guarantees and Other Financial Liabilities for Financial Year 2021/2022, as of December 31, 2021, total loan disbursements amounted to $15,227,167.16 and the loan’s amount outstanding (including arrears) was $14,212,022.68. Phase 3 involved laying fiber optic cable to connect Masaka, Mbarara, Kabale, the Katuna border post, and the Mutukula border post. It also the completion of the Kyenjojo-Masindi fiber optic cable link. Huawei Technologies Co., Ltd. was the contractor responsible for project implementation. Phase 3 was completed in December 2016.

Additional details

1. The China Eximbank loan (GCL) agreement can be accessed in its entirety via https://www.dropbox.com/s/effcaiu2e1davkp/Uganda%20National%20Transmission%20Backbone%20and%20e-Government%20Infrastructure%20Project%20Phase%203.pdf?dl=0. 2. The Government of Uganda’s agreement code for the GCL agreement is L-0575. The system identification number in the Government of Uganda’s Aid Management Platform (AMP) is 872992768. 3. One official source indicates that Phase 3 also involved installation of 756 kilometers of optic fiber cable to the towns of Masaka, Kyotera, Mutukula, Lyantonde, Mbarara, Ntungamo, Kabale and Katuna and linking Kyenjojo district to Masindi through Hoima. Phase 1 of the National Transmission Backbone and e-Government Infrastructure Project is recorded via Project ID#53401. Phase 2 of the National Transmission Backbone and e-Government Infrastructure Project is recorded via Project ID#53402. Phase 4 of the project was funded by the World Bank and the Government of Uganda and it focused on missing links in the NBI and last mile connectivity. 4. This project is also known as Phase 3 of National Backbone Infrastructure Project and Phase III of the National Data Transmission Backbone Infrastructure and e-Government Infrastructure Project (NBI/EGI). The Chinese project title is 乌干达电子政务和国家骨干网项目 (or 国家骨干网). 5. This China Eximbank loan is not included in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 6. Section 6.13 of the GCL agreement outlines the collateralization arrangement: "The Borrower undertakes that the repayment of principal and payment of interest and fees under this Agreement shall be credit enhanced and secured by the Escrow Account Agreement and the following arrangements: (1) After this Agreement has been signed by the Borrower and the Lender, the On-Lending Agreement(s) shall be duly signed by the Borrower and End-User, in form and substance acceptable to the Lender. (2) The Repayment Reserve Account and the Sales Collection Account shall be opened and maintained with the Escrow Account Bank and be subject to the escrow arrangement under the Escrow Account Agreement. The Repayment Reserve Account shall be used to maintain the minimum amount of balance as a debt service reserve as required by the Lender and the Lender shall be entitled to utilized the funds in the Repayment Reserve Account. The Sales Collection Account shall be used to collect the revenues generated from the Project and the required amount of funds in the Sales Collection Account shall be transferred to the Repayment Reserve Account as required by the Lender. (3) All the revenues (proceeds) which generate from the Project and belong to the End-User shall be applied in priority to payment of any and all amounts due and payable under this Agreement. (4) The Borrower undertakes to ensure that the successors or permitted signees and transferee of the parties to the Security Document shall abide by the provision of the relevant Security Documents. (5) Notwithstanding the existence of the Security Document, the Borrower shall be fully liable for the payment and repayment obligations under this Agreement. The Borrower’s obligations under this Agreement shall not be affected or undermined by the execution, delivery, and performance by the relevant parties of such Security Documents."

Number of official sources

18

Number of total sources

22