Narrative
Full Description
Project narrative
On November 9, 2018, the Chinese Government and the Government of Vanuatu signed a preferential loan framework agreement for Phase 2 of the Tanna and Malekula Road Rehabilitation Project. On the same day, China Eximbank and the Government of Vanuatu signed an RMB 350 million government concessional loan (GCL) agreement in 2018 for Phase 2 of the Tanna and Malekula Road Rehabilitation Project. The GCL carries the following borrowing terms: a 2% interest rate, a 7-year grace period, a maturity of 20 years, a 0.25% commitment fee, and a 0.25% management fee. The proceeds of the GCL are to be used by the borrower to finance a commercial contract between the Government of Vanuatu and China Civil Engineering Construction Corporation (CCECC). The purpose of the project is the construction of 45 kilometers of roads on Tana and Malekula Island. Once the project is completed, these Phase 2 roads will be connected with the first-phase project to form a complete road network around the island. The project aims to help improve the investment environment in the areas along the route, promote the export of local agricultural products and the development of tourism, and raise the level of infrastructure construction in Vanuatu. CCECC is the contractor responsible for implementation. On March 2, 2019, a groundbreaking ceremony took place. Construction was temporarily suspended due to the Covid-19 global pandemic. However, in November 2020, the Government of Vanuatu’s Council of Ministers (COM) granted CCECC authorization to bring in 28 engineers and special equipment operators from China to Vanuatu recently. CCECC assured COM that the workers had complied with the necessary health and safety requirements put in place by the Government of Vanuatu after leaving Shanghai in China and transiting in Auckland before arriving in Port Vila. The workers returned to Vanuatu intended to deliver major infrastructure projects, including Phase 2 of the Tanna and Malekula Road Rehabilitation Project. As of March 2, 2023, the second phase of the Tanna section of the project had reached completion. However, the second phase of the Malekula section of the project was still under construction as of December 15, 2022. The project's second phase was officially completed on December 18, 2023.
Staff comments
1. On April 14, 2014, China Eximbank and the Government of the Republic of Vanuatu (represented by the Ministry of Finance and Economic Management) signed an RMB 350,000,000 government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. 2014 (1) TOTAL NO. (504)] for Phase 1 of the Tanna and Malekula Road Rehabilitation Project. This loan is captured via Record ID#37763. 2. The preferential loan framework agreement for Phase 2 can be accessed in its entirety via https://www.dropbox.com/s/xruw517m71dl3jw/Loan%20Agreement%20for%20Tanna%20and%20Malekula%20Road%20Project%20Phase%20II.pdf?dl=0. The GCL agreement for Phase 1 can be accessed in its entirety via https://www.documentcloud.org/documents/20488925-vut_2014_448 3. The World Bank’s Debtor Reporting System identifies the face value of the loan for Phase 2 as $52,979,266.30. 4. This project is also known as the Tanna and Malekula Road Project Phase II. The Chinese project title is 瓦努阿图塔纳岛和马勒库拉岛公路项目二期. 5. A similar Loan ID, 39256, the following was identified in the source 35365: "An advance of 1 billion vatu was made to Air Vanuatu in 2008 for the purchase of Y12 Aircraft from China. The purchase of these aircraft was funded by a loan from the Chinese Government which has been on-lent to Air Vanuatu. This loan was made in Chinese Yuan Renminbi and has since been revalued to 856 million vatu as at 31 December 2010. An amount of 856 million vatu is therefore shown as a liability in borrowings and an asset in advances to Air Vanuatu. The remaining advance balance for Air Vanuatu represent additional loan advances given to the airline in recent years. " This infers that the first data point for the 2008 being inaccurate, as the project/loan has been revalued.