Bank of China contributes $224.58 million to $1.34744 billion syndicated loan for the Special Economic Zone at Duqm

Project narrative

On May 23, 2016, Oman Wanfang LLC, a Chinese state-owned enterprise (SOE) and Oman’s Special Economic Zone Authority in Duqm (SEZAD), signed an usufruct-investment agreement establishing the project. Per the terms of agreement, the development of the industrial park is to be carried out, together with other Chinese investors and companies, in multiple phases. The total aggregated investment is expected to be up to $10 billion by 2022, to be funded generally on a per project basis with other investors. Then, on June 13, 2019, a syndicate of six banks — including the Bank of China (BOC) — signed a $1.34744 billion syndicated loan agreement with Oman’s Ministry of Finance for the China-Oman (Duqm) Industrial Park Project (or the Special Economic Zone at Duqm Project). The loan carries a 15 year maturity and an unknown interest rate. Besides BOC, participants in the loan syndicate included Standard Chartered Bank, JPMorgan, Société Générale S.A. (SocGen), Crédit Agricole, and Banco Santander. Each lender contributed about $224,573,333.333 to the loan syndicate. Multilateral Investment Guarantee Agency (MIGA) insurance coverage was obtained to cover the Non-Honoring of Sovereign Financial Obligations (“NHSFO”) Guarantees on a debt financing structure of up to $2.0 billion (including principal, interest, MIGA premium and other financing costs) for a tenor of up to 15 years. The project involves the construction of marine infrastructure for new liquid bulk berthing facilities and related flood protection, as well as drainage, road and other related infrastructure at the Port of Duqm in the Special Economic Zone (SEZ) in Duqm, Oman. It has seven components: (1) Construction of roads, buildings and additional infrastructure at the commercial pre-gate, gates and inspection zone of Port of Duqm; (2) Design and development of marine infrastructure for the new liquid bulk berths in the Port of Duqm (stage 1) including optional dredging; (3) Construction of Road No 1 and Road No 5 to link the Liquid Berth Terminal at Duqm Port to the Heavy Industrial Zone and drainage systems along the two roads; (4) Construction of Jurf and Saay flood protection channels in Duqm; (5) Construction of Jurf and Saay flood protection dams in Duqm; (6) Engineering, procurement and construction of Duqm Refinery service corridor to liquid jetty; and (7) Construction of interface roadway projects in Duqm. Furthermore, the proceeds would be used to refinance some of the infrastructure projects on the Special Economic Zone at Duqm. Within the SEZ, the development of Duqm Port is being financed by the Government of the Sultanate of Oman (GoO) from the Sultanate budget, and in conjunction with $265 million loan from the Asian Infrastructure Investment Bank (AIIB) specifically for the construction of infrastructure components related to the commercial terminal at the Port of Duqm (PoD). Project implementation commenced on April 19, 2017. As of January 2019, Components 1-7 had achieved the following completion rates: Component 1 (74%), Component 2 (85%), Component 3 (40%), Component 4 (78%), Component 5 (88%), Component 6 (40%), and Component 7 (100%). The project was originally expected to reach completion by the end of the second quarter of 2020.