Active Mixed AidData Chinese Aid

[Cancelled] China Eximbank cancelled $0.77 million for $306 million preferential buyer’s credit for Kenneth Kaunda International Airport (KKIA) Airport Expansion Project (Linked to Record ID#40890, #40889, #92156 and #40893)

¥771.9K RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Zambia
Country	Zambia
Start Date	Sep 14, 2014
End Date	Feb 04, 2033
Duration	6,718 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`107878`

Grant Description

[Cancelled] China Eximbank cancelled $0.77 million for $306 million preferential buyer’s credit for Kenneth Kaunda International Airport (KKIA) Airport Expansion Project In June 2014, the Chinese Minister of Commerce and Zambian Minister of Finance signed a preferential loan framework agreement for the Kenneth Kaunda International Airport (KKIA) Airport Expansion Project.

Then, on June 15, 2014, Chinese Vice President Li Yuanchao and Zambian Vice President Guy Scott witnessed the signing of two Economic and Technical Cooperation Agreements (ETCA).

One committed a $32 million grant (captured via Record ID#40890) and the other committed $32 million interest-free loan (captured via Record ID#40889). Some of the funds from one or both of these ETCAs helped finance the KKIA Airport Expansion Project.

Then, on September 16, 2014, China Eximbank and the Government of Zambia’s Ministry of Finance and National Planning signed two loan agreements for the Kenneth Kaunda International Airport (KKIA) Airport Expansion Project: a $306,000,000 preferential buyer’s credit (PBC) and a $54,000,000 government concessional loan (GCL) agreement.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period7 years

💹 Interest Rate2%

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period7 years

💹 Interest Rate2%

The proceeds of the GCL and the PBC were to be used by the borrower to partially finance a $385,000,000 (or $385,809,673) commercial contract between the Government of Zambia and China Jiangxi Corporation for International Economic and Cooperation, which was signed on June 3, 2013 and amended on September 5, 2013.

As of July 2022, the PBC had achieved a 74.7% disbursement rate ($228,810,000 out of $306,000,000).

The project involves the expansion of Kenneth Kaunda International Airport in Lusaka (exact locational coordinates: -15.325266732091906, 28.448490127571315).

More specifically, the project involves the construction of a new presidential pavilion, passenger terminal, commercial complex, airport shopping mall, office park, warehousing facilities, fire station, control tower, and hotel. It also included the rehabilitation of the existing terminal into a new one to carter for domestic flights.

China Jiangxi Corporation for International Economic and Technical Cooperation is the contractor responsible for design and works.

The contract with Zambia Airports Corporation Ltd. (ZACL) came into force on March 10, 2015 and construction began on April 1, 2015. The project was originally expected to commenced on April 21, 2015 and conclude on October 20, 2019. The expected project completion date was later revised to June 2020 and then March 10, 2022.

As of July 31, 2020, the project had achieved an 89% completion rate. As of April 30, 2021, the project had achieved a 93% completion rate. As of June 30, 2021, $271,900,000 had been paid to CJIC (representing 75.53% of the EPC contract value).

As of August 31, 2021, the new airport terminal building had been handed over and commissioned, but, the following works were outstanding: bullet-proofing and finishing on the presidential pavilion (89% completion rate); steel structure installation on the corridor connecting the terminals (35% completion rate); a widening of the taxiway shoulder (98% completion rate); a rehabilitation of the existing terminal building (5% completion rate); and a rehabilitation of ZASTI (10% completion rate).

A formal airport opening ceremony took place on August 9, 2021. This project has been plagued by corruption allegations and performance problems.

In April 2015, media outlets reported that Zambian government officials and CJIC stole $25 million from the China Eximbank loan by unilaterally changing the original contract from $385 million to $360 million. This corruption allegation and contract renegotiations delayed project implementation by a few years.

Then, in October 2019, China Eximbank reportedly halted loan disbursements due to concerns that the Government of Zambia would default on its repayment obligations.

On July 29, 2022, the Ministry of Finance & National Planning (MOFNP) of Zambia announced that it was seeking lender approval to formally cancel the PBC’s undisbursed balance ($77,190,000.00); however, it also noted that it had not yet secured formal lender approval for this action.

This announcement came approximately 21 months after the Government of Zambia defaulted on its repayment obligations to Eurobond holders and approximately 6 weeks after China, France, and 14 other countries formed a creditor committee to discuss the Zambian authorities’ request for a debt treatment under ‘the Common Framework for Debt Treatment beyond the DSSI’ endorsed by the G20 and the Paris Club.

MOFNP also announced on July 29, 2022 that it planned to finance the completion of the Kenneth Kaunda International Airport (KKIA) Airport Expansion Project with general government revenues, and it signaled its intention to rescope the project to focus on the construction of the old terminal building and the extension of the runway and lighting system.

📋 Staff Comments

This project is also known as the Upgrading of the Kenneth Kaunda International Airport and Copperbelt International Airport Project and the KKIA Expansion and Upgrading Project. The Chinese project title is 赞比亚卡翁达国际机场升级扩建项目 or 卢萨卡肯尼斯·卡翁达国际机场升级扩建项目.
Some official sources suggest that this project was supported by a single, $360 million preferential buyer’s credit (see https://www.mfa.gov.cn/ce/cezm//chn/sbgx/jm/t1588486.htm). Other official sources indicate that China Eximbank and the Government of Zambia signed two loan agreements: an RMB-denominated government concessional loan (GCL) agreement and an USD-denominated preferential buyer’s credit (PBC) (see source ID#66648 and source ID#116283). For the time being, AidData treats this project as though it was financed with a PBC and and GCL. However, this issue warrants further investigation.
A 54-month commercial contract between the Government of Zambia and China Jiangxi Corporation for International Economic and Cooperation (CJIC) was signed on June 3, 2013. Then, on August 15, 2013, CJIC requested that the Government of Zambia revise the price of the contract to $360,000,000 and redesign the contract as an Engineering Procurement and Construction Contract (EPC)/Turnkey Project. (Note: A turnkey project is a contract under which a firm agrees to fully design, construct and equip a service facility and turn the project over to the purchaser when it is ready for operation). On September 5, 2013, the commercial contract that was initially signed in June 2013 was revised to $360,000,000, resulting in the reduction of the initial contract price by $25,809,673. The contract was also changed from a Bill of Quantity (BoQ) Milestone Payment Schedule to an Engineering Procurement and Construction Contract (EPC)/Turnkey Project. The revised contract went into effect on March 10, 2015. According to the terms of the revised contract, the project was expected to commenced on April 21, 2015 and conclude on October 20, 2019. The expected project completion date was later revised to June 2020 and then March 10, 2022.
In September 2019, China Jiangxi Corporation for International Economic and Technical Cooperation broke ground on a Kenneth Kaunda International Airport Substation and Overhead Transmission Line Project (Chinese name: 实施的赞比亚肯尼思•卡翁达国际机场变电站及架空输电线路项目). However, it is unclear whether this project is financed with the same loan captured in this project record.
In July 2022, Zambia announced that it is cancelling certain projects in their entirety or cancelling undisbursed portions of certain Chinese loans unilaterally. 11 China Exim bank projects are cancelled, 3 ICBC projects are cancelled, 1 Jiangxi Bank project is cancelled. While it is unclear if the creditors agreed to this action, there is some evidence that shows the cancellation had ocurred. This issue warrants more investigation. The announcement can be accessed at https://www.dropbox.com/scl/fi/bxixfu3t97x14epaqayjv/MEASURES-TAKEN-REGARDING-SOME-LOAN-FINANCED-PROJECTS.pdf?rlkey=azvseog366a7ntoo93fjiatrj&e=3&dl=0

📚 Sources & References

Zambia
China Ink U.S.$64 Million Deals
Zambia
China Ink U.S.$64 Million Deals
Zambian team China bound
ZAMBIA
CHINA INK $64M DEALS
EXIM bank of Zambia releases US$108 million for airport expansion
Zambia
China sign grant agreements worth over US $60 million
Chikwanda, his son Bwembya, and Joeseph Mwewa change Airport contract
Chinese firm confirms US$25 million was released, claims was used for airport drawings
Loan Agreement Delays Construction at Kenneth Kaunda International Airport
KKIA terminal works delayed
Chinese companies and Africa need each other like never before
HE WHO PAYS THE PIPER: ZAMBIA’S GROWING CHINA DEBT CRISIS
The Investors' Road Map Zambia 2019
Ministerial Statement On Financial And Economic Aspects Of The New Kenneth Kaunda International Airport (KKIA)
李杰大使赴江西国际肯尼思·卡翁达机场项目调研考察, 2015 ANNUAL PROGRESS REPORT, 2014 ANNUAL PROGRESS REPORT
Energy Sector Reports
中国进出口银行监事会于学军主席一行考察赞比亚卡翁达国际机场升级扩建项目
赞比亚卡翁达国际机场升级扩建项目营地荣获“中国海外工程优秀营地”
杨优明大使考察肯尼思·卡翁达国际机场升级扩建项目, 2018 Annual Report
中国江西国际：当好践行“一带一路”战略排头兵
赞比亚肯尼思•卡翁达国际机场升级扩建项目进展顺利
赞比亚肯尼思•卡翁达国际机场供电项目正式开工
杨优明大使考察肯尼思·卡翁达国际机场升级扩建项目
Zambia’s Minister of Transport Inspects the Upgrading of Kenneth Kaunda International Airport
Vice Governor Zheng Weiwen Inspects CJIC’s Zambia Market
Delegation, led by Ministers of Works and Transport
Inspect Upgrading and Expanding Project of Kenneth Kaunda International Airport.
President Xu Guojian Meets with Founding President of Zambia
Kaunda
赞比亚卡翁达机场供电项目部“逆行”中“加速跑”
CJIC Awarded as an Excellent Globalized Enterprise in 2013
President Xu Guojian Inspects Upgrading and Expanding Project of Kenneth Kaunda International Airport in Zambia
Delegation
Led by Standing Secretary of Zambia Transport and Information Ministry Misheck Lungu
Inspect Upgrading and Expanding Project of Kenneth Kaunda International Airport in Zambia
赞比亚肯尼思•卡翁达国际机场升级扩建项目建设顺利
On-the-spot Promotion Meeting on Projects of Concessional Loan and Export Credit Held in Zambia
How Chikwanda borrowed over US$9 billion for Zambia
Construction of the KKIA airport on course for completion in October 2019
Wednesday, 26th October, 2016 The House met at 1430 hours [MADAM FIRST DEPUTY SPEAKER in the Chair] NATIONAL ANTHEM PRAYER ________ ANNOUNCEMENTS BY MADAM SECOND DEPUTY SPEAKER ACTING LEADER OF GOVERNMENT BUSINESS IN THE HOUSE
TUESDAY, 20 MARCH, 2018 1 MINISTERIAL STATEMENT FINANCIAL AND ECONOMIC ASPECTS OF THE NEW KENNETH KAUNDA INTERNATIONAL AIRPORT, 2014 Economic Report
Ambassador Li Jie Attends the Commissioning Ceremony of Kenneth Kaunda International Airport
Ambassador Li Jie Attends the Commissioning Ceremony of Kenneth Kaunda International Airport
AUDITOR GENERAL ON THE ACCOUNTS OF THE REPUBLIC
CHINA'S EXIM BANK HALTS FUNDING FOR KK AIRPORT AMID FEARS ZAMBIA MIGHT DEFAULT ON PAYMENTS.
中国对外承包工程国别（地区）市场报告2019-2020.pdf
Attorney General didn’t approve revised $360m KKIA upgrade contract, reveals AG’s report
李杰大使赴中航国际恩多拉机场项目调研考察
MEASURES TAKEN BY THE GOVERNMENT ON THE IMPLEMENTATION OF LOAN FINANCED PROJECTS Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.