Narrative
Full Description
Project narrative
On September 21, 2012, China Eximbank and the Government of Fiji’s Ministry of Economy signed an RMB 642,417,124 government concessional loan (GCL) agreement for the Nabouwalu-Dreketi Road Upgrading Project. The GCL carries the a 2% interest rate, a maturity of 20.25 years (final maturity date: December 6, 2032), and an unknown grace period. The proceeds of the GCL were to be used by the borrower to finance a commercial contract with China Railway First Group (Fiji) Company Ltd. The loan’s (principal) amount outstanding was RMB 1515,449,391.95 (FJD 160,761,435.91) as of June 30, 2023. The borrower made principal payments worth RMB 51,544,938 (FJD 16,747,649.01) and interest payments worth RMB 11,238,228.53 (FJD 3,651,264.24) between July 1, 2022 and June 30, 2023. The purpose of the project was to upgrade a 70 km highway that runs from Labasa (Dreketi) to Nabouwalu (Nabouwalu jetty). The project also involved the construction of 14 new bridges and 209 culverts along the highway. China Railway First Group (Fiji) Company Ltd. was the contractor responsible for implementation. The project was officially launched on March 15, 2013 and completed on July 28, 2015. At its peak, the project employed 500 local workers. The Nabouwalu-Dreketi Road was opened for public use on January 11, 2016. This project reportedly reduced travel time between Nabouwalu jetty to Labasa from 7 hours to 2 hours. There are some indications that the China Eximbank loan for the Nabouwalu-Dreketi Road Upgrading 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).
Staff comments
1. The Chinese project title is 斐济北岛纳布瓦鲁-德瑞凯帝公路升级改造项目. 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies this project as being supported by a USD $840 million China Eximbank loan. However, AidData relies on the face value of the loan (RMB 642,417,124) that Fiji’s Ministry of Economy reported to AidData’s Executive Director in April 2018 correspondence.See https://www.dropbox.com/s/uu8muq0ldgd8kjp/FW-%20Request%20for%20List%20of%20Loans%20from%20Chinese%20Government%20Institutions.eml?dl=0 3. The data on amounts outstanding and repayments were provided by Fiji's Ministry of Finance to AidData's Executive Director in June 2023. See https://www.dropbox.com/s/jqsnza05ar9r8x3/Data%20on%20data%20on%20disbursements%2C%20repayments%20and%20amounts%20outstanding%20under%20China%20Eximbank%20loans.pdf?dl=0 4. 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 Fiji was 5.0833 years in 2012. AidData estimates the grace period of the China Eximbank loan that supported the Nabouwalu-Dreketi Road Upgrading 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 5. This loan participated in DSSI with China. AidData acquired the number of loans that were rescheduled in 2020 and 2021 from Fiji's ministry of finance website. All loans participated in both DSSI 2020 and 2021.