CHEC provides loan — via deferred payment arrangement — for Green Port Phase 1 Project

In 2001, Sea Ports Corporation (SPC) — a Sudanese state-owned company — and China Harbour Engineering Co. Ltd (CHEC) signed a deferred payment ("延期付款”) agreement for the Green Port Phase 1 Project. The loan carried an 4-year maturity and the borrower (SPC) was expected to make monthly repayments with the retained (ring-fenced) portion of its monthly operating income. The other borrowing terms of the loan are unknown. However, is is known that SPC used the deferred payment arrangement to finance a $22 million commercial (EPC+F) contract that it signed with China Harbour Engineering Co. Ltd. The purpose of the project was to construct two 50,000-ton multi-purpose berths that are 560 meters long and 15 meters deep — known as berths 21 and 22 — at the Green Port (Green Harbour), which is located on the eastern side of Port Sudan. The Green Port’s designed storage capacity was around 43,5000m2. It was designed to handle vessels weighing around 50,000 tons. The Phase 1 project scope also involved 1 workboat berth, a yard behind the port, road work and revetment works of 1,140 meters, and the supply and installation of related supporting facilities. CHEC was the EPC contractor responsible for implementation. Phase 1, per the terms of the EPC contract, was originally expected to commence in October 2001 and conclude in June 2003. Phase 1 ultimately commenced in February 2001 and was officially completed in July 2003.

Additional details

1. This project is also known as the Greenland Port Phase I Project or the Greenland Harbor Phase I Project. The Chinese project title is 期21、22號泊位工程 or 苏丹绿地1—2 泊工程 or 苏丹港绿地一期. 2. In a typical receivables financing agreement (or deferred payment agreement), the company that the project owner in the host country has selected as its engineering, procurement, and construction (EPC) contractor is also a lender to the project owner. The company assigns receivables under its EPC contract with the project owner to one of or more banks. Upon assignment of receivables, the bank or banks will release funds to the company so it can discharge its obligations under the receivables financing agreement as a lender. Receivables financing is also known as accounts receivable financing (finance) or A/R financing (finance) or 应收账款融资 (in Chinese). These other terms are used because the accounts receivable of a company (i.e., unpaid invoices) are being used as collateral to unlock working capital—typically in the form of a bank loan (‘receivables loan’). Sellers often face cash flow problems when their buyers do not make full payment at the due date of the invoice. A receivables financing arrangement addresses this problem by allowing them to sell their outstanding invoices to a bank at a discounted rate. This approach allows the seller to receive the remaining invoice amount before the due date of the invoice. The bank either gets its money back at invoice maturity through the seller (acting as a collecting agent) or directly from the debtor. 3. In Chinese, a deferred payment agreement is known as《延期付款协议》. 4. The face value of the deferred payment agreement is unknown. For the time being, AidData assumes that it is equivalent to 85% of the value of the EPC contract ($22 million). 5. Sea Ports Corporation (SPC) is an independent state corporation of Sudan that governs, constructs and maintains the ports, harbors and lighthouses of Sudan. The company was founded in 1974 by the government of Sudan to be the national port operator and port authority. 6. On November 7, 2004, CHEC and SPC signed a $45.1866 million EPC contract for the Green Port Phase 2 Project ( 苏丹绿地1—2 泊工程 or 苏丹港绿地二期项目 or 苏丹港绿地二期码头和疏浚项目). The project scope mostly involved the construction of two 50,000-ton container terminals. The terminals are 681 meters long and the revetment is 227.5 meters long. Phase 2 was completed in December 2006, but it is unclear if it was financed through a deferred payment arrangement. This issue warrants further investigation. See http://www.sasac.gov.cn/n2588025/n2588124/c4101724/content.html and http://219.143.227.132/n2588025/n2588124/c4101724/content.html and http://sd.china-embassy.gov.cn/jmwl/201909/t20190907_6756289.htm and http://finance.sina.com.cn/roll/20091127/00037022352.shtml. 7. This loan is not included in the SAIS-CARI database of Chinese loan commitments that was released in 2020 and re-released in 2021.

Number of official sources

16

Number of total sources

32