China Eximbank provides preferential buyer’s credit for Meat Processing Plants and Quarantine Facilities Project (Linked to Project ID#49148)

On November 10, 2015, China Eximbank and the Government of Mongolia signed a general loan agreement regarding the utilization of a $1 billion preferential buyer's credit (PBC) for various projects (as captured in Project ID#49148). Under the terms of the general loan agreement, all subsidiary (individual) loan agreements for specific projects carry identical borrowing terms: 20 year maturity, 7 year grace period, 2% interest rate, 0% management fee, and 0.25% commitment fee. Then, China Eximbank and the Government of Mongolia signed a subsidiary loan (PBC) agreement for the Meat Processing Plants and Quarantine Facilities Project. The proceeds of the loan were to be used by the borrower to partially finance a $78 million EPC contract with China Machinery Engineering & Construction Corporation (SINOCONST or 中国机械工业建设集团有限公司), which was signed on April 11, 2018. The purpose of this project is to introduce new agricultural production techniques and technologies to reduce costs, increase productivity, stabilize crop yields, and protect soil fertility. It involves the construction of a meat processing plant and a complex with a quarantine zones. It also involves the supply of medium and large tractors, medium and large combines and self-propelled sprayers. According to a project database (http://project.zasag.mn/) maintained by the Government of Mongolia's National Development Department, this project had achieved a 45% completion rate as of 2021.

Additional details

1. This project is also known as the technological reform and establishment of meat processing plants and quarantine facilities project. The Mongolian project title is “Махны үйлдвэр, хорио цээрийн бүс бүхий цогцолбор байгууламж барих, технологийн шинэчлэл хийх” төсөл. 2. The precise face value of the PBC is unknown. However, under the terms of the November 10, 2015 general loan agreement, the borrower was authorized to use the proceeds of subsidiary (individual) PBC agreements to finance up to 85% of the cost of commercial contracts. Therefore, AidData assumes that the face value of the PBC was equivalent to 85% of $78 million ($66.33 million). 3. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.

Number of official sources

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