China Eximbank provides RMB 433 million government concessional loan for E-Post Project

China Eximbank provides RMB 433 million government concessional loan for E-Post Project On July 21, 2011, China Eximbank and the Republic of Cameroon signed a government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO.24 (2011) TOTAL NO.(374) NO. (1420303052011111204)] worth RMB 433 million (CFA 36 billion) for the E-Post Project.

The proceeds of the GCL were on-lent to the Cameroon Postal Services (CAMPOST), which in turn used the loan proceeds to finance a $65,560,000 commercial contract that it signed with Huawei Technologies on August 1, 2009.

As of December 31, 2020, the loan (GCL) had achieved a 100% disbursement rate and its outstanding amount was equivalent to CFA 27.4 billion.

Its outstanding amount was equivalent to CFA 37 billion as of December 31, 2016, CFA 32 billion as of December 31, 2017, CFA 30 billion as of December 31, 2018, and CFA 29 billion as of December 31, 2019.

The purpose of the project was to build a data center, data communication network, internal communication system, and customer service. The ultimate goal of the project was to modernize CAMPOST's telecommunications infrastructure. Huawei Technologies was the contractor responsible for project implementation.

The project entered implementation in October 2011 and was completed on December 31, 2012.

There are some indications that the China Eximbank loan for the E-Post Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements.

Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213).

Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions.

The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022.

Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals).

The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed).

Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress.

Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project.

He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding.

He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’