China Eximbank provides $173.2 million preferential buyer’s credit for National Broadband Network Project

Project narrative

In November 2014, China Eximbank and the Ministry of Treasury of the Government of Papua New Guinea signed a $173,240,000 preferential buyer’s credit (PBC) agreement for the National Broadband Network Project. The borrowing terms of the PBC are unknown. However, it is known that the Ministry of Treasury of the Government of Papua New Guinea on-lent the proceeds of the PBC to Kumul Consolidated Holdings (a PNG state-owned enterprise, formerly known as Independent Public Business Corporation (IPBC). The ultimate borrower (Kumul Consolidated Holdings) was to use the proceeds of the PBC to partially finance a commercial contract worth $203 million that Telikom PNG Ltd — a state-owned telecommunications company in Papua New Guinea (PNG) — signed with Huawei Technologies Co., Ltd. on July 3, 2013. The purpose of the project was to construct a backbone for new fixed and mobile broadband services across the country and thereby provide new services, such as e-health, e-education, digital TV, and e-government applications. The project was to be implemented in two phases: Phase 1 was to involve core network modernization activities, fixed broadband rollout activities, and the establishment 3G and 4G mobile networks to cover 121 sites in Port Moresby and Lae (through the installation of hundreds of telecommunication towers). Phase 2 was to involve an expansion of the country’s tower infrastructure (bringing total network capacity to 949 towers across PNG) and an upgrading of the existing network to 4.5G in major towns and cities. Phase 1 commenced in June 2015. However, as of of 2021, many of the telecommunication towers that were installed during Phase 1 have broken down and Telikom PNG Ltd was reportedly unable to repair and maintain these assets because of its need to pay down debts to China Eximbank. Consequently Phase 2 was put on hold.