China Eximbank provides $43.124 million preferential buyer's credit for Locomotive Construction Plant Project (Linked to Record ID#98029, 96221)

Project narrative

On October 18, 2013, China Eximbank and Myanmar Railway — a state-owned railway company under the Ministry of Rail Transportation — signed a $43.124 million preferential buyer’s credit (PBC) agreement for the Locomotive Construction Plant Project. The PBC carried the following borrowing terms: a 20 year maturity, a 5 year grace period, a 2% interest rate, a 0.25% commitment fee, and a 0.25% management fee. The proceeds of the PBC were to be used by the borrowing to finance 90% of the cost of a $47.916 million EPC contract between Myanmar Railway and China National Machinery Import and Export Corporation, which was signed on July 19, 2013. The purpose of this project was to build a locomotive construction plant (factory) in the city of Naypyidaw. Upon completion, it was expected that the plant would be able to produce 20 locomotives each year. China National Machinery Import and Export Corporation was the general EPC contractor responsible for implementation. CRRC Dalian Company Limited was also involved in implementation of the project (most likely as a subcontractor). Construction began on June 1, 2015. Then on March 26, 2018, the assembly of the first locomotive commenced. The project was officially completed on December 29, 2018. The locomotive construction plant (factory) reportedly employs 450 people. There are some indications that the China Eximbank loan for the Locomotive Construction Plant Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Myanmar 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 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Record ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#96221).