China Eximbank provides $73.21 million buyer’s credit loan for Northern Road Rehabilitation Project (C7) (Linked to Record ID#71641, #71642, #71643, #71644, #71645, #71646)

Project narrative

On April 29, 2011, China Eximbank and the Government of Sri Lanka signed a $73.21 million buyer’s credit loan (BCL) agreement [No. BLA 201112] for the Northern Road Rehabilitation Project (C7). The face value of the BCL was subsequently downsized to $69,672,667. 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 2011, an unknown amount in 2012, $26,526,761.54 in 2013, $10,247,030.75 in 2014, and $17,772,592.45 in 2015. The borrower made repayments worth $5,806,056 in 2018, $5,806,056 in 2019, $5,806,056 in 2020 and $5,806,056 in 2021. The loan's amount outstanding was $58,060,555 as of December 31, 2017, $52,254,499 as of December 31, 2018, $46,448,443 as of December 31, 2019, $40,642,387 as of December 31, 2020, $34,836,331 as of December 31, 2021, and $31,933,306 as of June 30, 2022. The purpose of the Northern Road Rehabilitation Project (C7) was to rehabilitate and improved the Puttalam-Marichchikade-Mannar Road (B379). C7 stands for Contract 7. China Harbour Engineering Company Ltd was the contractor responsible for project implementation. The project commenced on August 24, 2012. It was originally scheduled for completion on February 23, 2015. However, it was completed ahead of schedule on November 26, 2014. As a result of this project, travel times between Jaffna and the Western and Southern Provinces were significantly reduced. However, this project has encountered debt repayment problems. 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.