Bank of China provides $77.35 million buyer’s credit loan for Phase 1 of National Telecommunications Backbone Project (PBNT)

On June 20, 2019, the Shenzhen Branch of Bank of China and the Government of Burkina Faso signed a $77.35 million buyer's credit loan agreement for Phase 1 of the National Telecommunications Backbone Project (PBNT). Then, on October 2, 2019, the Government of Burkina Faso authorized the ratification of the credit agreement. The loan carries the following borrowing terms: a 12-year maturity, a 3-year grace period, an interest rate of 6-month LIBOR plus a 2.5% margin, a management fee of 4%, a commitment fee of 0.8%. The loan is also backed by a Sinosure buyer’s credit insurance policy. The total cost of the buyer's credit insurance premium $6,843,413.73. Bank of China reportedly agreed to provide 60% of the funding needed for the first phase of PBNT while the other 40% would be provided by BNP Paribas. However, on October 8, 2019, the BNP Paribas announced that it was no longer involved in this project. The borrower was expected to use the proceeds of the Bank of China loan to partially finance a commercial contract that it signed with Huawei Technologies Co., Ltd. in July 2014. The purpose of the project is to construct a 307-kilometer fiber optic network linking the capital Ouagadougou and the city of Po, near the Ghanaian border. This fiber optic ‘backbone’ will have a capacity of 1,600 gigabits per second and will ten municipalities. It is parter of a larger, EUR 175 million program to provide 5,740 km of fiber optic coverage in Burkina Faso, at a cost of 175 million euros. Construction began on December 10, 2017. Phase 1 was completed and officially inaugurated on October 26, 2021.

Additional details

1. According to September 2018 email correspondence between AidData and the Government of Burkina Faso's Ministry of Ministry of Economy, Finance and Development, Huawei is responsible for paying 3% of the 4% management fee for the loan and $6,843,413.73 for the purchase of buyer's credit insurance from Sinosure. 2. One source suggests that the loan agreement was signed on September 2, 2018. However, the World Bank's Debtor Reporting System (DRS) indicates that the loan commitment year is 2019 rather than 2018. This issue merits further investigation. 3. AidData has estimated the all-in interest rate (v) by adding 2.5% to average 6-month LIBOR on August 24, 2018 (2.503%). 3. The French project title is travaux de réalisation clef en main du réseau national de fibre optique or la phase I du réseau national de fibre optique. 4. In the database of Chinese loan commitments that SAIS-CARI released in July 2020 and updated in March 2021 (which is now maintained by Boston University’s Global Development Policy (GDP) Center), no borrowing terms are recorded. AidData has recorded the borrowing terms reported by the Government of Burkina Faso's Ministry of Ministry of Economy, Finance and Development.

Number of official sources

4

Number of total sources

17