China Eximbank provides RMB 134 million government concessional loan for Public Low-Cost Housing Project (Linked to Record ID#62719, 95365, 95363)

Project narrative

On October 21, 2008, the Fijian Government approved that the Public Rental Board and Housing Authority undertake a Public Housing Strategy to ensure a consistent, coordinated, and effective approach towards meeting the constitutional provision that every citizen of Fiji has a basic right to housing. Then, on March 18, 2010, the Chinese Government and the Government of Fiji signed a preferential loan framework agreement on Low-Cost and Public Rental Housing Projects. Then, on July 28, 2010, China Eximbank and the Government of Fiji’s Ministry of Economy signed an RMB 134,339,034 government concessional loan (GCL) agreement for the Public Low-Cost Housing Project. The GCL carried the following borrowing terms: a 20 year maturity (final maturity date: October 11, 2030), a 5 year grace period, and a 2% interest rate. The Government of Fiji’s Ministry of Economy then on-lent the proceeds of the GCL to the Housing Authority of Fiji, a state-owned enterprise, and the Housing Authority of Fiji in turn used the proceeds of the GCL to finance a commercial contract that it signed with China Railway First Group (Fiji) Company Ltd on March 3, 2009. The loan’s (principal) amount outstanding was RMB 69,336,275.72 (FJD 21,625,011.92) as of June 30, 2023. The borrower made principal payments worth RMB 8,667,034.46 (FJD 2,816,036.98) and interest payments worth RMB 1,538,158.17 (FJD 499,738.18) between July 1, 2022 and June 30, 2023. The purpose of the project was to construct between 950 and 1050 housing units (flats) — the Tacirua East Stage 2 and Nepani Stage 2 subdivisions — in the town of Nasinu along Khalsa Road. It also involved the installation of road, water supply, drainage, electricity and street lighting infrastructure to support these housing units. China Railway First Group (Fiji) Company Ltd — a local subsidiary of China Railway First Group — was the contractor responsible for implementation. A formal groundbreaking ceremony took place on September 13, 2010. However, construction began on or around December 9, 2010. The project was expected to take 4 year to complete. Phase 1B of the Tacirua East Stage 2 Subdivision, which consisted of 81 high-end residential lots, was completed on May 11, 2012. At that time, the Housing Authority of Fiji said that it hoped to construct 1043 fully serviced residential lots by the end of the project. Construction was estimated to be finished in 2019, but was finished on August 31, 2018. A 2015 annual report published by the Housing Authority of Fiji says that the ‘the quality of model houses built by the contractor was substandard’ and Fiji’s Ministry of Finance and China Railway First Group (Fiji) Company Ltd reached some type of settlement on October 24, 2014. Then, in mid-2020, Members of Parliament in Fiji raised questions about whether the China Eximbank loan was fully utilized and whether the project ever reached completion. There are some indications that the China Eximbank loan for the Public Low-Cost Housing Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Fiji signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple government concessional loan (GCL) agreements (as captured via Record ID#95365). Debt service payments under all or many of these loan agreements were again deferred in 2021 (as captured via Record ID#95363).