Narrative
Full Description
Project narrative
On March 1, 2011, Myanmar's General Heavy Machinery Industry under the Ministry of Industry-2 signed an EPC contract with China National Heavy Duty Truck Group Co., Ltd (CNHTC) for the manufacturing of 10-15 ton trucks. China Eximbank and the Government of Myanmar subsequently signed a $20 million preferential buyer's credit (PBC) agreement for the Truck Manufacturing Project. The proceeds of the PBC were to be used by the borrower to partially finance the March 1, 2011 EPC contract. The borrowing terms of the loan are unknown. The purpose of the project was to provide technology for the manufacturing of 10-15 ton TE-31 Utility Truck (Medium) at No.11 General Heavy Machinery Factory (Yangon) under No.1 General Heavy Machinery. Upon completion, the project was expected to result in the production of 10-15 ton (6x4) trucks, water tankers, oil tankers and concrete mixers, and fire engines. 90 percent of machine parts used in the production were expected to come from the factories of the Ministry of Industry-2. CNHTC was the contractor responsible for implementation. The project was originally expected to be completed by the end of 2011. There are some indications that the China Eximbank loan for the Truck Manufacturing 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).
Staff comments
1. This project is also known as the Heavy Vehicle Construction Project. The Chinese project title is 改造升级缅甸第一汽车制造厂. The Burmese project title is အဆင့်ြမāင့်တင်၍ ၁၀~၁၅ တန် ကâန်တင်ယာဉ် ထâတ်လâပ်မĂ စီမæကိန်း or အႀကီးစားေမာ္ေတာ္ယာဥ္တည္ေဆာက္ေရး 2. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 15.0477 years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the Truck Manufacturing Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 5.7977 years in 2011. AidData estimates the grace period of the China Eximbank loan that supported the Truck Manufacturing Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 4.6293% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported the Truck Manufacturing Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0