China Eximbank provides $75.4 million buyer’s credit loan for Northern Road Rehabilitation Project (C3 and C7) (Linked to Record ID#71641, #71642, #71643, #71644, #71645, #71647)

Project narrative

On September 9, 2010, China Eximbank and the Government of Sri Lanka signed a $75.4 million buyer’s credit loan (BCL) agreement [No.BLA 201004] for the Northern Road Rehabilitation Project (C3 and C7). The face value of the BCL was subsequently downsized to $74,758,205. 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, $14,629,704.46 in 2013, and $17,770,335.30 in 2014. The borrower made repayments worth $6,229,850 in 2018, $6,229,850 in 2019, $6,229,850 in 2020 and $6,229,850 in 2021. The loan's amount outstanding was $52,953,729 as of December 31, 2017, $46,723,879 as of December 31, 2018, $40,494,029 as of December 31, 2019, $34,264,179 as of December 31, 2020, $28,034,329 as of December 31, 2021, and $24,919,402 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 (C3 and C7) was to rehabilitate and improve the 84 km Jaffna–Point Pedro Road (AB020), Putter-Meesalai Road (AB032), Jaffna–Kankasanturai Road (AB016), and Jaffna–Palali Road (AB018). C3 stands for Contract 3. C7 stands for Contract 7. China Railway No.5 Engineering Group was the contractor responsible for implementation of C7. China Harbour Engineering Corporation was the contractor responsible for implementation of C3. The preliminary activities of the project commenced on December 1, 2010. Project completion was originally scheduled for December 8, 2013. However, the project was completed ahead of schedule and handed over to Sri Lanka’s Road Development Authority on October 1, 2013.