Narrative
Full Description
Project narrative
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 via Record ID#49148). Under the terms of the general loan agreement, all subsidiary (individual) loan agreements for specific projects carry identical borrowing terms: a 20 year maturity, a 7 year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0% management fee, and a 0.25% commitment fee. Then, on April 25, 2019, China Eximbank and the Government of Mongolia signed a subsidiary loan (PBC) agreement [CHINA EXIMBANK PBC 2019 (2) TOTAL NO. (485)] worth $34,710,441.03 for the 20.9 km Gachuurt-Nalaikh-Choir Road Renovation Project. The proceeds of the loan were to be used by the borrower to finance 95% of the $36,537,306.35 cost of a EPC (commercial) contract [UBC-2016-02] between Mongolia’s Capital City Road Development Department and Sinohydro Corporation Limited, which was signed on December 13, 2016 and renewed on March 12, 2019. The loan officially went into effect on June 24, 2019 (after the borrower met all conditions precedent). The purpose of the project was to renovate a 20.9 km segment of the АН-3 road from Nalaikh-Choir junction to Gachuurt junction and thereby the connect the eastern provinces of Zamyn-Uud and Choir with the capital city of Ulaanbaatar. The road was designed to meet international standards, be fully lit, and have sidewalks and bicycle lanes. Sinohydro Corporation Limited was the general EPC contractor responsible for implementation. However, three Mongolian firms — Dardan Gobi LLC, Tegsh Plant LLC, and Gashuunii Gol LLC — were also involved in implementation as sub-contractors. Project implementation commenced on April 16, 2019 and the road was supposed to be closed to traffic from April 15, 2019 to November 30, 2019. The road was temporarily reopened to traffic on November 4, 2019. However, the project was only 72.3% complete as of November 15, 2019. Construction was still ongoing in late 2020. At least 320 people (64 Chinese workers and 256 Mongolian workers) were employed to support the implementation of this project.
Staff comments
1. This project is also known as the Nalaikh Road Upgrading Project from Gachuurt Crossroad to Nalaikh and Choir Crossroad and the Paved Road Route of 20.9 km from Gachuurt Crossing to Nalaikh-Choir Project. The Mongolian project title is “Гачууртын уулзвараас Налайх-Чойрын уулзвар хүртэлх 20.9 км авто зам” төсөл. The Chinese project title is 拉萊河公路項目 or 冈楚尔特至那来哈乔伊尔路口公路项目. 2. 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. 3. The PBC (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/xsh53zsx6uhngoo/Mongolia%202018%20China%20Eximbank%20Loan%20for%20Road%20from%20Gachuurt%20Junction%20to%20Nalaikh-Choir%20Junction.pdf?dl=0.