China Eximbank provides RMB 850 million government concessional loan for Libreville Electricity Network Renovation Project

Project narrative

On February 12, 2011, China Eximbank and the Government of Gabon signed an RMB 850 million government concessional loan (GCL) agreement for the Libreville Electricity Network Renovation Project. The loan was then approved by Gabon's President and Council of Ministers on February 21, 2013. The GCL carries a 20 year maturity and a 2.5% interest rate. The proceeds of the loan were used by the borrower to finance a 2009 commercial contract between Sinohydro Engineering Bureau 4 Co. Ltd and Gabon’s Ministry of Energy and Water Resources and the Ministry of Economy and Trade. The project involved the construction of a substation in Angondje, the expansion of two substations in Ambowe and Bissegué, and the construction three overhead transmission lines and two underground cable transmission lines measuring 130 km in length. Sinohydro Engineering Bureau 4 Co. Ltd was the contractor responsible for implementation. Its ultimate objective was to better connect Libreville to surrounding areas. Its work was overseen by the Electricity Office of Energy and Hydraulic Resources Department of the Government of Gabon. The project officially commenced on June 10, 2011. As of May 2014, the new substation in Angondje, the expansion of the two substations in Ambowe (Ntoum) and Bissegué, and the construction of a 23 km underground cable transmission line from Ambowe to Owendo (connecting to the Ambowe-Owendo power plant) were completed. Although this project was completed, it precise completion date is unknown. There are some indications that the China Eximbank loan for the Libreville Electricity Network Renovation Project may have financially underperformed vis-a-vis the original expectations of the lender. In mid-2014, a decline in international oil prices generated sharp reductions in Gabon’s oil exports and fiscal revenues. The country’s rising fiscal deficit led to the accumulation of arrears to external creditors. By 2017, the stock of the Government of Gabon’s external arrears stood at $115 million, including arrears to China, Canada, Germany, Spain, France, Israel, and South Korea. All of these arrears were successfully cleared by 2020. However, the Government of Gabon accumulated $3 million of additional arrears to Chinese creditors in 2020. By the end of May 2021, ‘the stock of [the Government of] Gabon’s external arrears stood at CFAF 98.03 billion (US$182.1 million), including CFAF 23.8 billion (US$44.2 million) vis-à-vis multilaterals and CFAF 21.05 billion (US$39.1 million) vis-à-vis government agencies and private creditors insured with companies from Paris Club member countries and from China [ICBC and China Construction Bank] CFAF 1.3 billion (US$2.42 million). The Government's strategy for the clearance of existing external arrears consists of focusing primarily on multilateral debt, bilateral debt, insured commercial commitments and seeking agreements with other creditors prior to the IMF Board meeting. Accordingly, we will clear the arrears vis-à-vis the multilaterals. We will also clear bilateral and commercial-insured arrears as follows: (i) Austria CFAF 6.83 billion (US$12.69 million); (ii) France CFAF 11.9 billion (US$22.11 million); (iii) Israel CFAF 2.23 billion (US$4.13 million); and Spain CFAF 0.09 billion (US$0.17 million). Regarding the other commercial arrears vis-à-cis AFREXIMBANK (CFAF 7.52 billion or US$13.97 million, and commercial non-insured vis-à-vis France CFAF 0.7 billion (US$1.24 million), Austria CFAF 8.71 billion (US$16.18 million), and Morocco CFAF 1.01 billion (US$1.87 million), we contacted these creditors individually to obtain from them the non-objection agreement. The same communication was made with China to which our bilateral payment arrears are about CFAF 34.01 billion (US$63.17 million).’ Then, in 2022, the IMF reported that the Government of Gabon’s external arrears to Chinese creditors stood at $23.9 million as of December 2021 and $1 million in June 2022. On April 3, 2024, Gabon’s Ambassador to China transmitted a letter (reference number: 000115/AMBAGAB-RPC/24) to the transitional authorities in Gabon, urging them to consider a debt settlement mechanism whereby the Government of Gabon would repay its outstanding debts to China Eximbank by depositing the cash proceeds from the sale of 1 or 2 oil cargoes (worth $150 million per cargo) each year to UNIPEC in a China Eximbank-controlled escrow account.