Chinese Government provides $18.7 million interest-free loan — via 14th Protocol — for TAZARA recapitalization (Linked to Project ID#56910)

In December 2009, China’s Ministry of Commerce (MOFCOM) provided a $39 million interest-free loan to support the ongoing operations and maintenance of the TAZARA railway (captured via umbrella Project ID#56910). The loan was issued under the 14th Protocol signed by the Chinese, Tanzanian, and Zambian Governments. However, it is unclear if the borrower of the loan was the Tanzania-Zambia Railway Authority (an intergovernmental organization), the Government of Tanzania, and/or the Government of Zambia. The National Assembly of Zambia reported in October 2010, the Government of Zambia obtained a loan from the Chinese Government on behalf of TAZARA under the 14th protocol. The loan (captured via captured in Project ID#85349) was reportedly worth $18.7 million and used for recapitalization of TAZARA, including funding for the rehabilitation of 6 main line locomotives and the supply of 90 wagons. China Civil Engineering Construction Corporation (CCECC) was the contractor responsible for the implementation of this project. In June 2011, it delivered 90 wagons worth RMB 36 million to the Government of Zambia. A TAZARA Manager reported that all the goods purchased through the 14th protocol were expected to be delivered by the end of 2011. However, the locomotives that were purchased with the proceeds of the loan(s) were ultimately delivered in December 2012. During an initial trial run, one of the locomotives (engines) developed technical problems at Mzenga, the first railway station on the Tazara line, just outside Dar es Salaam. A TAZARA source reported that "[e]ven after the Chinese technical team brought in a different team to look afresh at the [locomotives], nothing worked. They tried running two engines that failed to make it past Mbeya and one of the engines has been abandoned at our workshop there."

Additional details

1: In 1967, the Chinese Government provided an RMB 494 million interest-free loan to the Government of Zambia for the construction of the 1860 km Tanzania–Zambia Railway (TAZARA), stretching from Dar‑es‑Salaam to Kapiri Mposhi. Since then, the Chinese Government has provided a series of grants and loans to support TAZARA by providing spare parts, fuel, technical assistance, passenger coaches, and locomotives. 2: MOFCOM likely issued a separate interest-free loan under the 14th protocol to the Government of Tanzania or the Tanzania-Zambia Railway Authority. However, AidData has not yet independently confirmed the existence of such a loan or the borrower of the second loan, so it has coded Project ID#56910 as an umbrella project to minimize the risk of double-counting. According to the Tanzania-Zambia Railway Authority, ‘[f]rom 1968 when TAZARA was formally established to date, China has given TAZARA a total of RMB Yuan 2,543.3355 million (1USD = 6.83 Yuan) in the form of interest-free loans to the two shareholding governments of Tanzania and Zambia, including the loan for the construction of TAZARA’. Tanzania-Zambia Railway Authority, which is an intergovernmental organization, also has legal authority to borrow funds as an independent legal entity. This issue requires further investigation. 3: One source suggests that this project involved the supply of 6 new mainline locomotives, renewal of 3 locomotives, rehabilitation of 3 shunting locomotives, rehabilitation of 4 gantry cranes, rehabilitation of 1 rescue crane, supply of bearings to upgrade 12,000 old wagons, and supply of cement for the production of 30,000 pieces of concrete sleepers. Since loan terms for the interest-free loan are unavailable, AidData has set maturity period to 20 years by default and grace period to 10 years by default per China's Foreign Assistance White Paper (http://www.cidca.gov.cn/2018-08/06/c_129925064_3.htm) which states that the maturity period of interest-free loans is 20 years, with a drawdown period of 5 years, grace period of 5 years, and repayment over 10 years. AidData treats the drawdown period as providing 5 years of additional grace.

Number of official sources

7

Number of total sources

11