China Eximbank provides $70.58 million buyer’s credit loan for Northern Road Rehabilitation Project (C1B) (Linked to Record ID#71641, #71643, #71644, #71645, #71646, #71647)

Project narrative

On September 9, 2010, China Eximbank and the Government of Sri Lanka signed a $70,510,671 buyer’s credit loan (BCL) agreement [BLA201003] for the Northern Road Rehabilitation Project (C1B). 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, $15,210,500.55 in 2013, and $515,322.84 in 2014. The borrower made repayments worth $5,875,889 in 2018, $5,875,890 in 2019, $5,875,889 in 2020 and $5,875,889 in 2021. The loan's amount outstanding was $49,945,058 as of December 31, 2017, $44,069,169 as of December 31, 2018, $38,193,279 as of December 31, 2019, $32,317,390 as of December 31, 2020, $26,441,501 as of December 31, 2021, and $23,503,557 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 (C1B) involved the rehabilitation and improvement of the 90 km of Kandy-Jaffna Road segment of the A009 (A9) Road. This road segment runs from the 230 km post to Jaffna. C1B stands for Contract 1B. China National Aero Technology International Engineering Corporation (CATIC) was the contractor responsible for project implementation. Project implementation commenced on February 22, 2011. The project was completed on June 15, 2013.