China Eximbank provides RMB 313.8 million government concessional loan for East Coast Demerara Road Improvement Project

Project narrative

On November 23, 2016, the Export-Import Bank of China and the Government of Guyana signed a preferential loan framework agreement for the provision of a concessional loan to Guyana for the East Coast Demerara Road Improvement Project. Then, on January 9, 2017, the Export-Import Bank of China and the Government of Guyana signed a RMB 313,838,900 ($46,995,941.34) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2016) 32 TOTAL NO. (602)] for the project. The GCL carried the following terms: a maturity period of 20 years, a grace period of 5 years, an interest rate of 2%, a default (penalty) interest rate of 0%, a commitment fee of 0.25%, and a management fee of 0.25%. The loan proceeds were intended to finance a $46,995,941.34 commercial contract signed on December 30, 2014 between the Ministry of Public Infrastructure of Guyana and China Railway First Group Co,. Ltd. (CRFG). This contract was later revised on October 11, 2017, increasing its value to $50.196 million. The Government of Guyana contributed about $2.7 billion GYD to the project. As of December 31, 2020, the loan (GCL) had achieved a 93.2% disbursement rate ($43,354,843.55 out of $46,995,941.34) and its total amount outstanding (including principal and capitalized interest) was RMB 295,111,000. The project involved the widening and extension of the road on the eastern coast of the Demerara River between Better Hope and Belfield, which links Guyana's capital of Georgetown to high-population towns along the road, in order to improve the mobility of the population. The project impacted 16.8 kilometers of the road. In some parts, the project widened the road from two lanes to four lanes. In other parts, the project renovated the two-lane road to improve traffic conditions. The section of the road between Better Hope and Annandale was widened to four lanes, while Annandale-Belfield section underwent an asphaltic concrete pavement. The project also included the construction of concrete revetments at Happy Acres, Man Repos, and Triumph, and Happy Acres, construction of shoulder curbs and medians, the installation of high-density polyethylene (HDPE) culverts, the reconstruction of three bridges at Buxton, Golden Grove, and Montrose, and the installation of street lights and other road markings along the highway. The project also included the widening of seven bridges and 12 culverts, the construction of sidewalks, and the installation of 11 traffic signals at intersections. The project was expected to make the road, safer, more efficient, and environmentally sustainable. In addition to CRFG, its subsidiary China Railway First Group (Guyana) Co., Ltd. was involved in project implementation. In March 2012, the Government of Guyana launched a feasibility study for the project between the areas of Better Hope and Belfield using a grant of $688,950 USD from the Government of Kuwait. Guyana’s Government began preliminary work on the drainage and widening of 6.25 kilometers or road from Better Hope to Good Hope in 2014 at the cost of $3 billion GYD. After this work, Guyana approached China Eximbank for a loan to fully launch the project. Construction began on August 29, 2017. The construction contract with project implementer CRFG was set to end two years after the date of commencement. The project was completed in a ceremony attended by Prime Minister of Guyana Moses Nagamootoo on February 27, 2020, with some remaining funds diverted to continue work on expansion and renovating the road from Belfield to Mahaica. This was reportedly the first completed project in Guyana after Guyana signed onto the Belt and Road Initiative (BRI).