China Eximbank provides $200 million loan for National Broadband Network Project

In 2013, China Eximbank issued a $200 million loan to the Government of South Sudan for the National Broadband Network Project. The borrowing terms of the loan are unknown. The purpose of the project was to lay 1607 km of fiber optic cable across the country, and link it with undersea cable via Uganda and Tanzania. Huawei Technologies Co., Ltd. was responsible for project implementation. South Sudan's Government planned to lay the cable in 2013 and expected project implementation to reach completion in 2 years, but a war broke out in 2013, delaying the project. This project ultimately began implementation on March 17, 2015, when its groundbreaking ceremony was held. However, it does not appear that the project ever reached completion. This project became a source of local controversy and scandal. The Government of South Sudan's Ministry of Telecommunications and Postal Services lodged a formal complaint in February 2013 that Huawei Technologies Co., Ltd. misled the Office of the President and convinced it to sign a commercial contract with Huawei for the project without the knowledge and consent of the Ministry of Telecommunications and Postal Services. Evidence also emerged of overpricing, as the contractor's unit cost of laying a kilometer of fiber optic cable in South Sudan was $124,455. Yet the same contractor implemented a fiber optic cable installation project in Uganda at a unit cost of $50,047 per kilometer.

Additional details

1. This project is also known as the National Broadband and Informationization Network Project. The Chinese project title is 南苏丹国家宽带网络项目. 2. There is a chance that this project was financed through an export sellers’ credit to Huawei, which it in turn used to provide vendor financing to MTN Sudan (or MTN South Sudan). This issue warrants further investigation. MTN acknowledges in its 2014 bond prospectus that "we have made substantial equipment purchases from, and have entered into vendor financing arrangements with, Ericsson, Huawei and ZTE in certain jurisdictions." In the same bond prospectus, MTN discloses that one of its subsidiaries -- MTN Sudan Company Limited -- received USD- and euro-denominated vendor financing. However, AidData has not yet independently confirmed that China Eximbank provided an export seller's credit to Huawei which it then on-lent to MTN for its activities in South Sudan. Aztan law firm in Sudan notes on its website that it advised Huawei on a a 396 million euro loan that it finalized with MTN Sudan in 2011 and a $550 million loan that it finalized MTN Sudan in 2014. MTN Sudan eventually split into MTN Sudan and MTN South Sudan. 3. This loan is not included in the SAIS-CARI database of Chinese loan commitments that was released in July 2020. 4. The February 2013 complaint from Madut Biar Yel, South Sudan's Minister for Telecommunication and Postal Services, can be accessed in its entirety via https://www.dropbox.com/s/99zz3xiwd8qmjtp/112536.pdf?dl=0.

Number of official sources

6

Number of total sources

9