China Eximbank provides preferential buyer’s credit for Hydro-Generator Manufacturing Plant Construction Project (Linked to Project ID#63667, 98029, 96221)

On December 11, 2007, China Eximbank, the Central Bank of Myanmar, and Myanmar Foreign Trade Bank signed a preferential buyer’s credit (PBC) agreement for the Hydro-Generator Manufacturing Plant Construction Project. The face value and borrowing terms of the PBC are unknown. However, it is known that the borrower was to use the proceeds of the PBC to finance a commercial contract that Myanmar’s Ministry of Industry No. 2 signed with China National Machinery Import and Export Group in 2006. The purpose of the project was to construct a hydro-generator manufacturing plant (owned by Myanmar’s Ministry of Industry No. 2) capable of supporting small-scale hydropower projects. China National Machinery Import and Export Group was the contractor responsible for implementation. This project was completed on December 31, 2009. After the enterprise is completed, it will produce mixed-flow, axial-flow, and tubular units with a unit capacity of less than 30,000 kilowatts, which are widely used in small water conservancy projects. There are some indications that the China Eximbank loan for the Hydro-Generator Manufacturing Plant Construction 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 Project ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Project ID#96221).

Additional details

1. This project is also known as the Turbine Generator Plant Construction Project and the Myanmar Water Turbine Foreign Aid Project. The Chinese project title is 缅甸水轮发电机制造厂 or 缅甸水轮机援外项目. 2. The PBC that supported this project may have also supported a Railroad Equipment Procurement Project (captured in Project ID#63667). 3. This China Eximbank loan is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 4. 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 14.5376 years in 2007. AidData estimates the maturity of the China Eximbank loan that supported the Hydro-Generator Manufacturing Plant Construction 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. 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 5.56 years in 2007. AidData estimates the grace period of the China Eximbank loan that supported the Hydro-Generator Manufacturing Plant Construction 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 6. 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 2.8812% in 2007. AidData estimates the interest rate of the China Eximbank loan that supported the Hydro-Generator Manufacturing Plant Construction Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0

Number of official sources

8

Number of total sources

11