Chinese Government provides FJD 9.3 million grant for for Raiwai Public Rental Housing Project (Linked to Record ID#62721 and Record ID#62719)

Project narrative

On October 21, 2008, the Fijian Government approved that the Public Rental Board and Housing Authority undertake a Public Housing Strategy to ensure a consistent, coordinated, and effective approach towards meeting the constitutional provision that every citizen of Fiji has a basic right to housing. Then, on March 18, 2010, the Chinese Government and the Government of Fiji signed a preferential loan framework agreement on Low-Cost and Public Rental Housing Projects. On July 28, 2010, China Eximbank and the Government of Fiji’s Ministry of Economy signed an RMB 36,000,000 government concessional loan (GCL) agreement for the Raiwai Public Rental Housing Project.The GCL, which is captured via Record ID#62719, carried the following borrowing terms: a 20 year maturity, a 5 year grace period, and a 2% interest rate. The Government of Fiji’s Ministry of Economy then on-lent the proceeds of the GCL to the Public Rental Board (PRB), a state-owned enterprise, and the PRB in turn used the proceeds of the GCL to finance a commercial contract that it signed with China Railway First Group (Fiji) Company Ltd in 2010. According to a 2016 Audit Report, Fiji’s Cabinet resolved on February 1, 2011 that the Public Rental Board (PRB) would be responsible for reimbursing (repaying) the Fiji Government for all debt-related costs and fees associated with the GCL. However, the 2016 Audit Report also found that the loan receivable was not recorded in the Lending Register or the FMIS general ledger for the past five years (2011-2015). PRB commenced loan repayment in March 2016. The purpose of the project was to construct 210 housing units (one and two-bedroom flats) in the Raiwaqa and Raiwai neighborhoods within the city of Suva. It was implemented in two phases. Phase 1 involved the construction of 82 housing units and Phase 2 involved the construction of 128 housing units. China Railway First Group (Fiji) Company Ltd was the contractor responsible for implementation. A groundbreaking ceremony took place on August 12, 2011. However, in January 2013, the Suva City Council has issued a stop work order to China Railway First Group (Fiji) Company Ltd. According to the Chairman of the Housing Authority and Public Rental Board, Colonel Mosese Tikoitoga, the stop work order followed a prolonged dispute between China Railway First Group (Fiji) Company Ltd and the Public Rental Board over building code issues. China Railway First Group — the parent company of China Railway First Group (Fiji) Company Ltd. — argued that the commercial contract it signed with the Public Rental Board allowed the structural design of the buildings to be of Chinese national standards. Colonel Mosese Tikoitoga said a meeting between all the parties including the Ministry of Local Government would be convened so that an amicable solution is reached. He also said that the Public Rental Board had taken its grievances to the Suva City Council, which resulted in the issuance of the stop work order. The dispute over building standards also led to a significant cost escalation and a disagreement between the parties regarding the cost of the underlying commercial contract. The dispute was referred to Fiji’s Dispute Adjudication Board (DAB), which is an independent body. However, it reportedly took a plea by Prime Minister Bainimarama during a visit to Beijing, and the Chinese Embassy stepping in with FJD 9.3 million of grant funding (captured via Record ID#85704), to resolve the dispute. Phase 1 was completed on or around May 13, 2014. Phase 2 was originally slated for completion in August 2014. However, it was ultimately completed on August 31, 2018.