China Eximbank provides $330 million preferential buyer's credit for Second Penang Bridge Construction Project (Linked to Record ID#34958)

Project narrative

In 2006, the Government of Malaysia selected UEM Group Berhad — a wholly owned subsidiary of Khazanah Nasional Bhd — as the concessionaire responsible for building, managing, operating and maintaining the second Penang bridge. Then, on July 13, 2007, a joint venture called the CHEC-UEMC Consortium was formed by China Harbour Engineering Company Ltd (51% ownership stake) and UEMC (49% ownership stake) to implement the Penang Second Crossing Bridge Construction Project. UEMC is a subsidiary of UEM Group. On the same day, China Eximbank and Bank Pembangunan — a state-owned development bank in Malaysia — signed a memorandum of agreement (MOA) regarding a $800 million preferential buyer's credit (PBC) for the Second Penang Bridge Construction Project (captured via Record ID#34958). The specified borrowing terms of the PBC were as follows: 20 year maturity and 3% interest rate. The proceeds of the PBC were to be used by the borrower to partially finance an EPC contract with the CHEC-UEMC Consortium. However, UEM and CHEC could not arrive at a shareholders agreement in July 2008 due to disagreements over the apportionment of jobs and costs. Then, on August 29, 2008, the Malaysian Government terminated its concession agreement with UEM Group Berhad. Jambatan Kedua Sdn Bhd (JKSB) -- a special purpose vehicle and wholly owned company of Malaysia’s Ministry of Finance Incorporated (MOF Inc.) -- was subsequently appointed as the concessionaire responsible for the Second Penang Bridge Construction Project. In 2009, China Eximbank and JKSB signed a $330 million PBC agreement for the Second Penang Bridge Construction Project. Malaysia’s Ministry of Finance issued a sovereign guarantee in support of the loan (PBC). China Eximbank waived the requirement that the borrower purchase buyer’s credit insurance from Sinosure. The borrower made repayments worth $11 million in 2016 and $22 million in 2017. As of December 31, 2017, the loan’s amount outstanding was $297 million. As of December 31, 2018, the loan’s amount outstanding was approximately $288 million (RM 1.2 billion). The purpose of the project was to construct a 24 km (15 mi) dual carriageway toll bridge that connects Bandar Cassia (Batu Kawan) in Seberang Perai on mainland Peninsular Malaysia with Batu Maung on Penang Island. The bridge consists of precast segmental concrete marine viaducts in 55-meter (180-feet) span modules and a cast in-situ concrete cable-stayed bridge measuring 475 meters (1,558 feet). It is the second bridge to link the island to the mainland after the first Penang Bridge. It extends over 16.9 km (10.5 mi) of water, making it the longest bridge in Malaysia and the second longest in Southeast Asia. China Harbour Engineering Company Ltd (CHEC) and UEM Builders were the main contractors responsible for implementation. Construction began on November 8, 2008 and the originally scheduled project completion date was November 8, 2013. As of December 2009, the project had achieved an 8.65% completion rate. It was 24% complete as of April 2010. On January 27, 2011, the construction of the main bridge pile foundation was completed. The project was 60.87% complete as of March 2012. The capping of the main tower took place on August 7, 2012. As of October 3, 2012, the project was 84% complete. The final closure of the cable stayed bridge at the main navigational span of the Penang Second Bridge was completed on April 20, 2013. Then, on April 30, 2013, Prime Minister Najib Tun Razak became the country’s first leader to use the Penang Second Bridge to cross from the island to the mainland to attend a function in Kepala Batas, Seberang Perai. Penang Second Bridge was officially completed and accepted by the project owner (JKSB) on September 15, 2013. It was opened to the traffic at 12.01 AM on March 2, 2014 and renamed the Sultan Abdul Halim Muadzam Shah Bridge. It was named after Tuanku Abdul Halim Muadzam Shah, the Sultan of Kedah and the reigning Yang di-Pertuan Agong of Malaysia, by Prime Minister Datuk Seri Najib Tun Razak.