Narrative
Full Description
Project narrative
On September 5, 2018, the Republic of Guinea signed an EUR 559,471,286 (approximately $598 million) loan agreement with ICBC and China Eximbank for two separate projects: the Conakry Urban Road Project and the Reconstruction of the RN1 Coyah-Mamou-Dabola Project. This loan was issued as a subsidiary loan agreement under the $20 billion Resource and Loan Cooperation Framework Agreement that the Chinese Government and the Republic of Guinea signed on September 5, 2017 (see Record ID#65113 and Record ID#64352). As such, it carried the following borrowing terms: a 15 year maturity, a 4 year grace period, and an interest rate of 6-month Euribor plus a 2.5% margin. The loan is backed by a Sinosure credit insurance policy. It is also collateralized against cash deposited in an escrow account at ICBC Singapore from the bauxite mining tax revenues of three Chinese companies (Henan China, Chalco and SPIC). The cash balance of the escrow account was EUR 76.35 million in 2020 and 2021. The subsidiary loan agreement was approved by Guinea’s National Assembly on December 10, 2018. EUR 328,927,000 ($374,946,000) of the loan proceeds supported the RN1 Coyah-Mamou-Dabola Project and EUR 186,118,000 ($212,496,000) of the loan proceeds supported the Conakry Urban Road Project. Record ID#65115 captures ICBC's contribution to the EUR 328.9 million loan for the RN1 Coyah-Mamou-Dabola Project. Record ID#98816 captures China Eximbank's contribution to the EUR 328.9 million loan for the RN1 Coyah-Mamou-Dabola Project. Record ID#65116 captures ICBC's contribution to the EUR 186.1 million loan for the Conakry Urban Road Project. Record ID#98817 captures China Eximbank's contribution to the EUR 186.1 million loan for the Conakry Urban Road Project. The amount outstanding under the EUR 328,927,000 loan for the RN1 Coyah-Mamou-Dabola Project was EUR 130,533,000 was of December 31, 2020. The amount outstanding under the EUR 186,118,000 loan for the Conakry Urban Road Project was EUR 35,588,000 was of December 31, 2020. Due to Covid-19 pandemic-related implementation delays, the loan agreement with ICBC and China Eximbank was amended on April 21, 2023 to (a) extend the final disbursement date for the Conakry Urban Road Project from November 19, 2022 to December 19, 2023, and (b) extend the final disbursement date for the RN1 Coyah-Mamou-Dabola Project from December 20, 2022 to December 19, 2023. The RN1 Coyah-Mamou-Dabola Project involves the rehabilitation of several National Roads (RN) including the R1 on the 370 km Coyah-Mamou-Dabola axis. China Road and Bridge Corporation is the contractor responsible for its implementation. The project officially commenced on April 19, 2018. It was originally expected to reach completion by February 7, 2022. However, it fell behind schedule due the Covid-19 pandemic and the project's expected completion date was pushed back to June 7, 2023. The Conakry Urban Road Project involves the construction and rehabilitation of 52 roads (measuring 69.5 kilometers in length) in the municipalities of Kaloum, Dixinn and Matam and two interchanges in Kagbelen and Matoto. China Bengbu International Technology and Economic Cooperation (CBITEC) is the EPC contractor responsible for its implementation. Guinea's Grand Engineering Supervision Authority (ACGP) and France's EGIS Group are responsible for project supervision. Although various ceremonies were organized to celebrate the start of the project (on April 27, 2018 and December 2, 2018), it did not officially commence until June 21, 2019. The project was originally expected to reach completion by May 31, 2022. However, it fell behind schedule due the Covid-19 pandemic and the project's expected completion date was pushed back to June 30, 2023. An important project milestone took place on April 18, 2023: the Kagbelen Interchange was officially inaugurated and opened for traffic.
Staff comments
1. The French project title is Reconstruction de la RN 1 Coyah – Mamou - Dabola 370 km or Route Nle n°1. The Chinese project title is 几内亚1号国道和科纳克里市区道路项目 or CMD公路项目. 2. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it records a single $508 loan from ICBC and China Eximbank for the RN1 Coyah-Mamou-Dabola Reconstruction Project and the Conakry Urban Road Project. It does not record any borrowing terms. Based on the April 2019 Public Debt Statistical Bulletin published by Guinea’s Ministry of Economy and Finance, AidData records one $212,496,000 (EUR 186,118,000) loan from ICBC and China Eximbank for the Conakry Urban Road Project and another $374,946,000 (EUR 328,927,000) loan from ICBC and China Eximbank for the Reconstruction of the RN1 Coyah-Mamou-Dabola Project. AidData also relies on the borrowing terms for these loans (15-year maturity, 4-year grace period, and an interest rate of 6-month Euribor plus a 2.5% margin) that are reported by Guinea’s Ministry of Economy and Finance. 3. Milbank LLP served a transaction adviser to ICBC and China Eximbank. According to Milbank LLP, ‘the transaction employed a highly innovative structure by which, in order to meet ICBC and CEXIM’s credit and bankability requirements, the borrower allocates certain taxes due to it in respect of certain mining projects being conducted in Republic of Guinea as credit enhancement for the payment of the obligations of the borrower under each of the Sinosure covered facilities. This marks the first time this structure has been successfully implemented in the Republic of Guinea.’ The underlying source of collateral is cash deposited in escrow account at ICBC Singapore from the mining tax revenues of three Chinese companies (Henan China, Chalco and SPIC). 4. The World Bank’s Debt Reporting System (DRS) indicates that official sector loan commitments from China to the Government of Guinea (and/or entities backed by Government of Guinea repayment guarantees) in 2018 amounted to $1,783,868.027. This amount is roughly equivalent to the sum of the $1,175,468,700 loan that China Eximbank issued for the 450MW Souapiti Hydroelectric Power Plant Construction Project (captured via Record ID#187) in 2018 and the EUR 559,471,286 ($598 million) loan that ICBC and China Eximbank issued for the Conakry Urban Road Project and the Reconstruction of the RN1 Coyah-Mamou-Dabola Project (captured via Record ID#65115 and ID#65116) in 2018. 5. AidData has estimated the all-in interest rate by adding 2.5% to average 6-month EURIBOR in September 2018 (-0.268%). 6. The individual contribution of two lenders to this EUR 328,927,000 syndicated loan is unknown. For the time being, AidData has estimated the contribution of ICBC and China Eximbank by assuming that each lender contributed an equal amount (EUR 164,463,500) to the syndicated loan. 7. The September 5, 2018 loan agreement between the Republic of Guinea, ICBC and China Eximbank was amended in June 2023 (see https://guineebiz.com/magr1.php?langue=fr&type=rub11&code=calb7000 and https://www.lejour.info/2023/09/01/decrets-colonel-mamadi-doumbouya-promulgue-deux-conventions/). However, the purpose of the amendment is unknown. This issue warrants further investigation.