Narrative
Full Description
Project narrative
On September 9, 2010, China Eximbank and the Government of Sri Lanka signed a $71.2 million buyer’s credit loan (BCL) agreement [BLA 201002] for the Northern Road Rehabilitation Project (C1A). The face value of the BCL was subsequently downsized to $70,980,947. The BCL carries the following borrowing terms: a 6-month LIBOR plus a 2% margin, a 15-year maturity, a 3-year grace period, a 0.5% management fee, a 0.7% commitment fee, and a 6% Sinosure insurance premium (exposure fee). China Eximbank disbursed an unknown amount in 2010, an unknown amount in 2011, an unknown amount in 2012, $20,741,874.69 in 2013, and $3,667,089.19 in 2014. The borrower made repayments worth $5,915,079 in 2018, $5,915,078 in 2019, $5,915,079 in 2020, and $5,915,079 in 2021. The loan's amount outstanding was $50,278,170 as of December 31, 2017, $44,363,091 as of December 31, 2018, $38,448,013 as of December 31, 2019, $32,532,934 as of December 31, 2020, $26,617,855 as of December 31, 2021, and $23,660,316 as of June 30, 2022. By early 2022, it was clear that the loan was non-performing. On April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions. Its decision to suspend external debt service reportedly affected all China Eximbank loans with amounts outstanding at the time of the announcement. The Northern Road Rehabilitation Project (C1A) involved the rehabilitation and Improvement of the 63 km Kandy-Jaffna segment of the A009 Road. This road segment runs from Galkulama to the 230 km post. C1A stands for Contract 1A. China National Aero Technology International Engineering Corporation (CATIC) was the contractor responsible for project implementation. This project commenced on February 7, 2011. It was completed on June 15, 2013.
Staff comments
1. Average 6-month LIBOR rate in September 2010 was 0.478%. AidData has therefore estimated the all-in interest rate as 0.478% + 2.0%, or 2.478%. 2. This project is also known as Northern Road Rehabilitation Project (A009) From Galkulama to 230 km Post), the 63Km length of Kandy - Jaffna Road (A009) (From Galkulama to 230 km Post) Project - C1A, and the Northern Road Rehabilitation Project (C1A). 3. C1A stands for contract 1A. 4. Some official sources identify the management fee as 0.3%. This issue warrants further investigation. 5. The Government of Sri Lanka loan key number is 2010031.