China Eximbank provides $474 million buyer's credit loan for Units 3 and 4 of Chashma Nuclear Power Plant Project (or Units 3 and 4 of CHASNUPP) (Linked to Record ID#36237 and Record ID#70728)

Project narrative

In 2010, China Eximbank and the Government of Pakistan signed three separate loan agreements for Units 3 and 4 of the Chashma Nuclear Power Plant Project. On February 22, 2010, China Eximbank and the Government of Pakistan signed a $1 billion preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2010) 1 TOTAL NO. (109) and #CHINA2010-2-109] for Units 3 and 4 of the Chashma Nuclear Power Plant Project (captured via Record ID#70728). The PBC carried the following borrowing terms: a 20 year maturity, an interest rate of 2 percent, an 8 year grace period, a management fee of 0.2 percent, and a commitment fee of 0.2 percent. Additionally, on February 22, 2010, China Eximbank and the Government of Pakistan also signed an RMB 731 million government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2010) 10 TOTAL NO. (307)] for Units 3 and 4 of the Chashma Nuclear Power Plant Project (captured via Record ID#36237). The GCL carried the following borrowing terms: a 20 year maturity, an 8 year grace period, a 1% interest rate, a management fee of 0.2%, and a commitment fee of 0.2%. Two months later, on April 9, 2010, China Eximbank and the Government of Pakistan signed a $474 million buyer’s credit loan (BCL) agreement [ID#2010210195, ID#1260002052010210195, and #CHINA10-APR] for Units 3 and 4 of the Chashma Nuclear Power Plant Project (captured via Record ID#70730). The BCL carried the following borrowing terms: an interest rate of 6 percent, a 20 year maturity, a 8 year grace period, a management fee of 0.75 percent, a commitment fee of 0.5 percent, and a Sinosure credit insurance fee of 7 percent. The proceeds of the GCL, PBC, and BCL were to be used by the borrower to finance a $2.37 billion commercial contract between Pakistan Atomic Energy Commission (PAEC) and Shanghai Nuclear Engineering Research and Design Institute, which was signed on April 28, 2009. As of June 20, 2017, $1.513 billion had been disbursed by China Eximbank for the Chashma Nuclear Power Project 3 and Chashma Nuclear Power Project across all three loan agreements (PBC, GCL, and BCL). The purpose of the project was to construct Unit 3 and Unit 4 of the Chashma Nuclear Power Plant (or CHASNUPP), which is a large commercial nuclear power plant located in the vicinities of Chashma colony and Kundian in Punjab in Pakistan (exact locational coordinates are 32.390278, 71.4625). More specifically, the purpose of the project was to (a) construct CHASNUPP-III, a 315-MW two-loop pressurized water reactor (PWR), using between 2.4—3.0% low-enriched uranium (LEU) fuel with a gross capacity of 340 MW; and (b) construct CHASNUPP-IV, another 315-MW two-loop pressurized reactor with a gross capacity of 340 MW. China Zhongyuan Engineering, China Nuclear Industry No.5 Construction Company, and Shanghai Nuclear Engineering and Research Design Institute were the contractors responsible for Unit 3 of the Chashma Nuclear Power Plant Project. China National Nuclear Cooperation (CNNC) was the contractor responsible for Unit 4 of the Chashma Nuclear Power Plant Project. Pakistan Atomic Energy Commission (PAEC) supervised the work of all four Chinese contractors. Construction of CHASNUPP-III (also known as C3 or Unit 3) commenced on May 28, 2011. CHASNUPP-III joined the nation's electricity grid system on October 15, 2016 and commenced its operations on December 6, 2016. It was officially inaugurated on December 28, 2016. Construction of CHASNUPP-IV (also known as C4 or Unit 4) started on December 18, 2011. CHASNUPP-IV was connected to nation's grid system on June 25, 2017 and it commenced its operations on September 19, 2017. There are some indications that the China Eximbank buyer's credit loan for Units 3 and 4 of the Chashma Nuclear Power Plant Project financially underperformed vis-a-vis the original expectations of the lender. On or around July 1, 2020, China Eximbank and the Government of Pakistan signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2020 and December 31, 2020 under the buyer's credit loan agreement for Units 3 and 4 of the Chashma Nuclear Power Plant Project. Then, on November 19, 2020, China Eximbank and the Government of Pakistan signed another debt suspension agreement [No. DSSI2021PHASE1-038]. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between January 1, 2021 and June 30, 2021 under the buyer's credit loan agreement for the Units 3 and 4 of the Chashma Nuclear Power Plant Project. Then, on or around July 1, 2021, China Eximbank and the Government of Pakistan signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the buyer's credit loan agreement for Units 3 and 4 of the Chashma Nuclear Power Plant Project. Then, in April 2022, local media reported that the operation of the Chashma Nuclear Power Plant and the repayment of the China Eximbank loans that supported its construction had become a challenge due the absence of requisite payments from the Government of Pakistan's Central Power Purchasing Agency–Guaranteed (CPPA-G). The debt service suspension (rescheduling) from July 2020-December 2020 is captured via Record ID#96254. The debt service suspension (rescheduling) from January 2021-June 2021 is captured via Record ID#96250. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Record ID#96253.