Project ID: 61213

China Eximbank provides $229.1 million preferential buyer’s credit for Kumul Submarine Cable Project

Commitment amount

$ 270638285.756834

Adjusted commitment amount

$ 270638285.76

Constant 2021 USD


Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]


Papua New Guinea


Communications (Code: 220)

Flow type


Level of public liability

Central government debt

Financial distress






Mixed (The next section lists the possible statuses.)





Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle


Completion (The next section lists the possible statuses.)










Actual start


Planned complete


Actual complete


NOTE: Red circles denote delays between planned and actual dates


On July 6, 2016, during PNG Prime Minister Peter O'Neill's state visit to China, China Eximbank and the Ministry of Treasury of the Government of Papua New Guinea signed a $229,198,215.15 (PGK 726,460,000) preferential buyer’s credit (PBC) agreement for the Kumul Submarine Cable Project. The borrowing terms of the PBC are as follows: a 21.0217-year maturity, 6.5217-year grace period, and a 2% interest rate. The Ministry of Treasury of the Government of Papua New Guinea on-lent the proceeds of the PBC to PNG DataCo Ltd. (a PNG state-owned enterprise), which in turn use the proceeds of the PBC to finance approximately 85% of the cost of a $270 million (PGK 879,000,000) commercial contract with Huawei PNG Pty Limited and thereby make payments for the acquisition of PNG DataCo Ltd.’s infrastructure assets. The PGK-denominated on-lending facility agreement between the Government of Papua New Guinea and PNG DataCo Ltd. was signed on December 2, 2016. PNG DataCo Ltd.’s obligations under the on-lending agreement are fixed at a USD foreign exchange rate of USD 0.3155. During the financial year that ended on December 31, 2018, PNG Dataco made 2 drawdowns under its on-lending facility agreement agreement with the Government of Papua New Guinea on June 24, 2018 and November 15, 2018. These drawdowns (disbursements) were worth PGK 258,442,445. As of December 31, 2019, the loan had achieved a 100% disbursement rate. The loan’s outstanding amount (including principal and amortized interest) was $237,656,369.50 (PGK 738,979,943) as of December 31, 2019 and PGK 753,269,375 as of December 31, 2020. The Kumul Submarine Domestic Fiber Cable Network is a national backbone transmission network that involved the laying of 5,457-5,600 kilometers of submarine fiber optic cable to connect at least 15 coastal and maritime provincial centers across Papua New Guinea. It consists of three systems. System 1 (blue line) connects Jayapura, Papua Province to Arawa with 7 branching units connecting to Vanimo, Wewak, Lorengau, Madang, Kimbe, Kavieng and Kokopo. System 2 (green line) connects Madang to Pom with 3 branching units connecting to Lae, Popondetta and Alotau. System 3 (black line) connects Daru and Kerema to the existing branching units in the LNG system. The submarine cable network was constructed in two phases: Phase I of the project involved connecting Port Moresby to Madang, with landing stations in the Port Moresby, Alotau, Popondetta, Lae and Madang. Phase II involved connecting Madang to Wewak, Vanimo and New Guinea Islands. The ultimate goal of the project was to improve access to broadband and internet services to all users throughout the coastal centers of the country. This network also sought to provide additional interconnection points to international submarine cables in Madang, Vanimo and Jayapura (Indonesia) resulting in more reliable international telecommunication services for PNG. Huawei PNG Pty Limited was the contractor responsible for implementation. PNG DataCo Ltd., the wholesale arm of Kumul Telikom Holdings (a state-owned company in PNG), was also involved in implementation. China National Machinery Import and Export Corporation was a subcontractor and the designated provider of cable equipment. Phase A (System 2) commenced in November 2018 with the arrival of the cable-laying ship carrying 6,000 km of fiber optic cable in Port Moresby and it was successfully completed on February 19, 2020. Phase B (System 1) started immediately thereafter in late February 2020, linking Vanimo from Jayapura, and linking Wewak, Lorengau, Kimbe, Kokopo, and Kavieng with the cable network, and eventually landing in Kieta on May 18, 2020. Phase C (System 3) was completed with the landing of the cable in Daru, Western Province on June 2, 2020, marking the completion of the laying of the 5,457 km of domestic cable. The project as a whole was ultimately completed ahead of schedule on or around August 21, 2020. It has generated controversy because the underlying commercial contract with PNG DataCo Ltd. and Huawei Technologies Co Ltd. was reportedly overpriced by 30-50%, creating a heavy public debt load. According to a report published in The Australian, there are also concerns that revenue generated by the the Australian Government-financed Coral Sea Cable System (CSCS) is being used to ‘cross-subsidize’ the Kumul Submarine Cable Project (i.e. facilitate loan repayment to China Eximbank). Additionally, there are indications that the ultimate borrower (end user) of the China Eximbank loan is underperforming vis-a-vis original expectations. On December 16, 2021, the PNG Government's Department of Treasury agreed to amend the repayment terms of its on-lending agreement with PNG DataCo Ltd. to 'accommodate the financial capability of [PNG DataCo Ltd.]’. In its audited financial statement for the year ending on December 31, 2020, PNG DataCo Ltd. claimed that 'the completion of the company's core network infrastructure in the Domestic Submarine Cable and the Coral Sea Cable Network will contribute to the further growth in revenue outside the [Kumul Telikom Holdings] Group [and] this will reduce dependency on the [Kumul Telikom Holdings] Group and the related unfavorable business arrangements currently in place which have cause hindrance in doing business freely.' In February 2021, Tony Morisause, the General Manager of PNG DataCo Ltd. announced that his company was already planning an upgrade to the cable management system, as he claimed all available bandwidth had already been superseded by demand.

Additional details

1. This project is also known as the PNG National Submarine Fibre Cable Network Project, the PNG National Submarine Fiber Cable Network Project, the Domestic Submarine Cable Network Project, the KSCNP Project, or the PNG National Submarine Fiber Cable Network Project. The Chinese project title is Kumul国内海底光缆项目 or 持的巴新国家海底光缆项目. 2. Kumul Submarine Cable Project was implemented in anticipation of the Coral Sea Cable System (CSCS) — an undersea fiber-optic cable connecting Sydney, Honiara and Port Moresby — being established. The CSCS was financed with a grant from the Australian Government and it was completed in December 2019, a month ahead of schedule. The Coral Sea Cable Company will be in charge of maintaining and operating the international cable, which is expected to increase digital capacity by a thousand times to 20 terabytes. Meanwhile, the state-owned PNG DataCo will be responsible for the connection domestically and for wholesaling the service to local retailers such as Telikom PNG and Digicel. PNG’s capital city will benefit from the improved bandwidth almost immediately. Already, data costs have fallen sharply and will do so further. According to PNG DataCo, the cost of internet use has fallen from $1,300 per Mbps per month in 2014 to $54 (K185)per Mbps per month at the start of 2020. 3. PNG DataCo Ltd.’s audited financial statements (for the years ending on December 31, 2019 and December 31, 2020) can be accessed in their entirety via and 4. One source suggests that the Ministry of Treasury of the Government of Papua New Guinea on-lent the proceeds of the PBC to Kumul Consolidated Holdings rather than PNG DataCo Ltd. This issue warrants further investigation. 5. PNG Dataco Limited ("the Company') is an unlisted Company, incorporated in Papua New Guinea on December 1, 2010. The Company is owned by Kumul Telikom Holdings (KTH) from November 17, 2018 when PNG DataCo was transferred to KTH from KCH. Prior to November 17, 2019, PNG DataCo was owned by Kumul Consolidated Holdings (KCH) — formerly the Independent Public Business Corporation ("IPBC"). KTH is a state-owned corporation and is 100% owned by the Independent State of Papua New Guinea ("Ultimate Parent"), through KCH. Its registered office is located at Level 1 Wokples Bullding, Section 531, Lot 12, Savannah Heights, Waigani, NCD, Papua New Guinea. 6. PNG Data Co Limited was the recipient of Australian Aid by the Government of Australia in the O3B Satellite solutions funded by the Department of Foreign Affairs and Trade (DFAT) of Australia. The O3B Satellite asset was transferred to DataCo at a cost of PGK 8,074,575 in 2019 and forms part of the infrastructure assets of PNG Data Co Limited. 7. The loan's borrowing terms are drawn from the World Bank's Debtor Reporting System (DRS). See and and

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Number of total sources


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Direct receiving agencies [Type]

Ministry of Treasury of the Government of Papua New Guinea [Government Agency]

Indirect receiving agencies [Type]

PNG DataCo Ltd. [State-owned Company]

Implementing agencies [Type]

PNG DataCo Ltd. [State-owned Company]

China National Machinery Import & Export Corporation (CMC) [State-owned Company]

Huawei PNG Pty Limited [Private Sector]

Loan Details


21 years

Interest rate


Grace period

7 years

Grant element (OECD Grant-Equiv)


Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit