China Eximbank provides $300 million buyer's credit loan for Maputo Ring Road Project

China Eximbank provides $300 million buyer's credit loan for Maputo Ring Road Project On February 17, 2012, the Government of Mozambique signed a $300 million buyer's credit loan (BCL) agreement with China Eximbank for the Maputo Ring Road Project. This loan agreement was then ratified by the Government of Mozambique’s Council of Ministers on February 28, 2012.

Its interest rate is unknown.

Its first scheduled principal payment date is July 21, 2019 and its last scheduled principal payment (maturity) date was June 13, 2032. The loan's (principal) amount outstanding was $219,230,769 as of December 31, 2022. The Maputo Ring Road Project involved the construction and upgrading of six road sections over 74 kilometers.

These road sections include: (1) 6.325 km expansion of Avenida da Marginal from Hotel Radisson to Costa do Sol; (2) 19.869 km construction of road from Costa do Sol to Marracuene; (3) 10.506 km construction of road from Chiango to Zimpeto; (4) 15.5 km expansion of the national road N1 from Zimpeto to Marracuene; (5) 16.299 km construction of road from Zimpeto to Tchumene (including connection to N4); and the (6) 5.5 km construction of a road from the Machava node to Praça 16 de Junho (including connection to Avenida 24 de Julho).

In total, the project involved 52 kilometers of new road construction, 22 kilometers of road upgrading work, and the construction or rehabilitation of 6 bridges and 3 interchanges. It is a two-way four-lane highway with double asphalt concrete pavement and a design speed of 60–80 km per hour. It allows commuters to bypass the existing N1 and N4 road.

It also includes tolls and sidewalks. China Road and Bridge Corporation (CRBC) was the EPC contractor responsible for project implementation.

A groundbreaking ceremony took place on March 7, 2012 and a foundation stone laying ceremony took place on September 20, 2012. The project was originally expected to take 2 and a half years to execute. Construction was expected to be completed no later than December 2014.

However, the project encountered various delays and problems during implementation (including a strike by construction workers in 2014).

The implementation of the project and its management were handed over to Maputo Development Corporation (Maputo-Sul), a public company, in December 2014. The project was ultimately completed on December 29, 2015. Centro de Integridade Pública (CIP) and Chr.

Michelsen Institute (CMI) claim that the commercial contract for the Maputo Ring Road Project, which was issued to CRBC without a tender, was overpriced by $40 million and plagued by corruption.

Whereas the actual unit cost of constructing each kilometer of the road was $5 million, the market-determined unit cost of constructing each kilometer of the road would have been $2.5 million to $3 million.

CIP and CMI also claim that the quality of the Maputo Ring Road is poor and vulnerable to erosion along at least two-thirds of its length.

Tolls on the Maputo ring road, contested by Mozambican civil society organizations, were charged beginning on February 1, 2022.

At that time, Rede Viária de Moçambique (Revimo) -- the concession company created in September 2018 and made responsible for the Maputo-Katembe Bridge, the Maputo Ring Road and the EN6 (Beira-Machipanda) Road in December 2019 -- charged tolls for use of the Maputo Ring Road ranging from 40 meticais (55 euro cents) for light vehicles to 580 meticais (€8) for heavy vehicles, with discounts of up to 75% for public transport and 60% for frequent users.

CIP claimed at the time that Mozambicans could refuse to pay the tolls, alleging 'unconstitutionality and illegalities.' Another Mozambican NGO, the Centre for Democracy and Development (CDD), challenged the role of (Revimo) and advocated the revocation of the Maputo Ring Road concession.

CDD questioned the interests of the concession company, stating that people 'do not know its organizational structure and the circumstances in which it was created.' There are also some indications that the China Eximbank loan for the Maputo Ring Road Project may have financially underperformed vis-a-vis the original expectations of the lender.

In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond.

Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government.

Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Record ID#66283).