Narrative
Full Description
Project narrative
On June 23, 2019, the Chinese Government and the Government of Sierra Leone signed a preferential loan framework agreement for Phase 2 of the National Fibre Optic Backbone Infrastructure Project. Then, on August 26, 2019, China Eximbank and the the Government of Sierra Leone’s Ministry of Finance signed an RMB 207,000,000 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO (2019) 10 TOTAL No. (681)] for Phase 2 of the National Fibre Optic Backbone Infrastructure Project. The GCL agreement was then ratified by Sierra Leone’s Parliament on September 19, 2019. The borrowing terms of the GCL are as follows: a 20-year maturity, a 5-year grace period, a 1% interest rate, a 0.25% (RMB 517,500) management fee, and a 0.25% commitment fee. The borrower is responsible for repaying the loan between 2024 and 2039. It also agreed to deposit project-related revenues in a special account to facilitate repayment. Under the terms of the loan agreement, Government of Sierra Leone’s Ministry of Finance is also responsible for on-lending the proceeds of the GCL to a state-owned enterprise in Sierra Leone known as Sierra Leone Cable Company Limited (SALCAB). SALCAB, in turn, is expected to use the proceeds of the GCL to finance a $30 million commercial contract (ID#0002881900010V) between the Government of Sierra Leone’s Ministry of Information and Communications and Huawei Technologies Co., Ltd., which was signed on April 11, 2019. SALCAB signed an on-lending agreement with the Ministry of Finance on August 22, 2019. Under the original terms of the loan agreement, the borrower was responsible for making 30, equal, semi-annual principal payments. Loan disbursements amounted to $17,733,000 in calendar year 2020 and $11,700,100 in calendar year 2021. The (principal) amount outstanding under the loan was $0 as of December 31, 2019, $17,733,000 as of December 31, 2020, $29,433,100 as of December 31, 2021, and $29,433,100 as of December 31, 2022. According to official records, a disbursement of USD 6,000,000 was planned for 2023 and another USD 6,000,000 was planned for 2024. The purpose of the project is to lay a 721.5-kilometer fiber-optic network that covers 15 major cities in the northern, eastern and southern regions of Sierra Leone. Upon completion, the telecommunications infrastructure is expected to allow telecommunications operators to offer 3G and 4G services. Huawei Technologies Co., Ltd. is the EPC contractor responsible for implementation. On April 24, 2020, the Government of Sierra Leone received the relevant technical equipment for project implementation. By September 2020, construction had commenced. Then, on September 28, 2020, Sierra Leone’s Ministry of Information and Communications and Sierra Leone Cable Limited (SALCAB) carried out an inspection visit to a project site in Moyamba. The delegation also inspected the work in progress along the Mano Junction-Daru axis. The technical implementation of the work involves digging the path where the fiber cables will be laid, deploying the fiber ducts, backfilling the path and finally blowing the fiber through the duct. The work along this axis was approximately 50% complete in September 2020. The second phase of the network is expected to reach completion within two years. Once the project’s civil work are completed, the next step will be the installation of other equipment and the introduction of fiber optic cables inside the high definition power pipes. From February 21 to March 2, 2023 a technical team from Sierra Leone's Ministry of Information and Communications dispatched a team to monitor and evaluate the project's implementation. They were told by the contractors that the project was in its final stages of completion. Around August 21, 2023, Huawei officially handed the completed National Fibre Backbone project over to LeoneCom. The connectivity and communication infrastructure for 14 out of 16 districts in Sierra Leone were enhanced.
Staff comments
1. In 2012, China Eximbank provided RMB 97 million for Phase I of this project (as captured via Record ID#30254). 2. This project is also known as the National Fibre Backbone Phase II Project, the Second Phase of the Fiber Optic Cable Project, and the NFB Phase 2 Project. The Chinese project title is 塞拉利昂光纤骨干网二期项目. 3. The Government of Sierra Leone loan identification number for this project is 2019012. 4. The identification number for this project in the Government of Sierra Leone’s Development Assistance Database (DAD) is SL/004762. 5. This China Eximbank loan is not recorded the China’s Overseas Development Finance Dataset, which Boston University's Global Development Policy Center published in December 2020. Nor is it included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. 6. The first phase of the fiber optic backbone project was also implemented by Huawei, reportedly as part of a broader scheme supported by the World Bank and Economic Community of West African States (ECOWAS) to expand digital access throughout the region. 7. The Sierra Leone Cable Limited (SALCAB) — a state-owned enterprise — was created by the Government of Sierra Leone as part of an effort to participate in the Africa Coast to Europe (ACE) Consortium that landed the undersea Submarine Fibre Optic Cable. SALCAB has two components, both of which were financed with loans. The ACE submarine cable is being paid for with a World Bank loan. The terrestrial backbone is being paid for with loans from Islamic Development Bank and China Eximbank. 8. The China Eximbank GCL (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/2jp6sb3je9altau/Government%20Concessional%20Loan%20on%20Sierra%20Leone%20Fibre%20Backbone%20Network%20Project%20Phase%20II%20August%2026%2C%202019.pdf?dl=0. 9. The on-lending agreement between the Government of Sierra Leone’s Ministry of Finance and SALCAB can be accessed in its entirety via https://www.dropbox.com/s/2jp6sb3je9altau/Government%20Concessional%20Loan%20on%20Sierra%20Leone%20Fibre%20Backbone%20Network%20Project%20Phase%20II%20August%2026%2C%202019.pdf?dl=0. 10. The commercial contract (ID#0002881900010V) between the Government of Sierra Leone’s Ministry of Information and Communications and Huawei Technologies Co., Ltd can be accessed in its entirety via https://www.dropbox.com/s/2jp6sb3je9altau/Government%20Concessional%20Loan%20on%20Sierra%20Leone%20Fibre%20Backbone%20Network%20Project%20Phase%20II%20August%2026%2C%202019.pdf?dl=0. 11. Data on disbursements, repayments, and amounts outstanding can be accessed via https://www.thesierraleonetelegraph.com/wp-content/uploads/2019/12/Sierra-Leone-Auditor-General-Report-2018.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Auditor-General-Annual-Report-2022.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/assl-auditor-general-annual-report-2016.pdf and https://mof.gov.sl/wp-content/uploads/2022/08/Sierra-Leone-Report-on-SOEs-_31st-August-2022-Final.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Auditor-Generals-Annual-Report-2018.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Annual-Report-on-the-Account-of-Sierra-Leone-2021.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Auditor_Generals_Annual-Report-2017_10_1_19.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Annual-Report-on-the-Account-of-Sierra-Leone-2019.pdf and https://mof.gov.sl/wp-content/uploads/2024/04/FINAL-REPORT-on-SOEs-CLEAN-24TH-APRIL-2024.pdf and https://website.auditservice.gov.sl/wp-content/uploads/2023/12/Auditor-Generals-Annual-Report-2020.pdf 12. The 'special account' is described in Clause 6.13 of the China Eximbank loan agreement. Further, §1.7 reads 'Any payments or repayments made by SALCAB under this On-Lending Agreement shall be made through a Special Account (the Escrow Account) opened in accordance with the provisons of the Loan Agreement.' and §1.8 reads 'SALCAB shall issue a standing authorization to their bankers to transfer to the Special Account the equivalence of debt service falling under the On-Lending Agreement, one month before the respective debt service due date, to enable funds to be utilized from the Special Account to effect debt service payment to the EXIM Bank of China'