China Eximbank provides $42.78 million buyer’s credit loan for Northern Road Rehabilitation Project (C11A) (Linked to Record ID#71641, #71642, #71644, #71645, #71646, #71647)

Project narrative

On September 9, 2010, China Eximbank and the Government of Sri Lanka signed a $42,767,678 buyer’s credit loan (BCL) agreement [No. BLA 201005] for the Northern Road Rehabilitation Project (C11A). 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, $19,158,143.75 in 2013, and $3,411,473.37 in 2014. The borrower made repayments worth $3,563,973 in 2018, $3,563,974 in 2019, $3,563,973 in 2020 and $3,563,973 in 2021. The loan's amount outstanding was $30,293,772 as of December 31, 2017, $26,729,799 as of December 31, 2018, $23,165,825 as of December 31, 2019, $19,601,852 as of December 31, 2020, $16,037,879 as of December 31, 2021, and $14,255,893 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 purpose of the Northern Road Rehabilitation Project (C11A) was to rehabilitate and improve the 42.4 km Mullaitivu-Kokkilai-Pulmodai segment of B297 Road. C11A stands for Contract 11A. Sinohydro Corporation was the contractor responsible for project implementation. The preliminary works of this project began on December 1, 2010. However, the project did not officially begin until February 14, 2011. It was originally scheduled for completion on August 14, 2013. However, it was ultimately completed and taken over by Sri Lanka’s Road Development Authority on August 13, 2013.