Narrative
Full Description
Project narrative
On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Record ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on May 23, 2019, AGTF signed a $30 million loan agreement (ID#5050200000751) with the Government of Nigeria for the Ebonyi State Ring Road Project. On the same day, the African Development Fund (ADF) issued a $40 million loan (ID#2000200003851) to the Government of Nigeria for the same project. The borrowing terms of the AGTF loan, which entered into force on August 20, 2019, are as follows: a 25-year maturity, an 8-year grace period, an interest rate of 6-month LIBOR plus a 0.8% margin, a commitment fee of 0.25%, an an upfront (management) fee of 0.25%. The first ADF and AGTF loan disbursements took place on March 31, 2020. The $167.6 million project is being co-financed by the Islamic Development Bank ($80 million of debt financing) and the Government of Ebonyi State ($17.6 million of equity financing). The purpose of the project is to rehabilitate four bituminous road sections of the Ebonyi State Ring Road (measuring 177.81 km in total), which connects 8 out of the 13 Local Government Areas (LGAs) of Ebonyi State: Abakaliki, Izzi, Ebonyi, Ohaukwu, Ezza North, Ezza South, Ishielu and Ikwo. The four road sections are: (i) Section I: Ohaukwu - Onueke (35.48 km), (ii) Section II: Onueke - Nwezenyi (52.42 km), (iii) Section III: Nwezenyi - Ndoko (50.99 km), and (iv) Section IV: Ndoko - Ezzamgbo (38.91 km). Other project components include (i) Road Safety Interventions, (ii) HIV/AIDS Sensitization, (iii) Baseline Data Collection and ESMP Monitoring, (iv) Audit Services, (v) Support to the Project Management Unit, (vi) Procurement Consultant, and (vii) Capacity Building. The ADB and AGTF will finance Section III and part of Section IV, while the Islamic Development Bank will finance the construction of Sections I and II and the Government of Ebonyi State will finance compensation and resettlement costs as well ass the construction of 20 km of Section IV (which was already at an advanced stage of completion in 2019). MESSER PATAN NIGERIA JV/REINFORCED GLOBAL RESOURCES LTD (LOT 1) is the contractor responsible for the implementation of Section III (Lot 1). Its contract implementation start date was September 30, 2021. The project as a whole is expected to reach completion within 5 years (September 30, 2026).
Staff comments
1. This project is also known as the Nwezenvi-N’Doko Road Rehabilitation Project. 2. The AfDB project identification number is P-NG-DB0-014. 3. Different economic rates of return (EIRRs) for the 4 different road sections are reported on pg. 9 of the AFDB project appraisal report (20.3% for Section I, 27.7% for Section II, 14.5% for Section III, and 19.6% for Section IV). 4. The all-in interest rate (3.368%) was calculated by adding an 0.8% margin to the average 6-month LIBOR rate in May 2019 (2.568%). 5. The margin of 0.8% is calculated by adding the Funding Cost Margin (unknown) to the Lending Margin (0.8%).