China Eximbank provides RMB 170.5 million government concessional loan for Phase 1 of Douala (Yato) Water Supply Project (Linked to Record ID#31229)

China Eximbank provides RMB 170.5 million government concessional loan for Phase 1 of Douala (Yato) Water Supply Project On August 30, 2007, the Chinese Government and the Government of Cameroon signed a preferential loan framework agreement for Phase 1 of the Douala (Yato) Water Supply Project.

Then, on March 21, 2018, China Eximbank and the Government of Cameroon’s Ministry of Economy, Planning, and Regional Development signed an RMB 170,513,606 (CFA 14 billion) government concessional loan (GCL) agreement for Phase I of the Douala (Yato) Water Supply Project.

The borrower was expected to use the proceeds of the GCL to finance a commercial contract between CGC Overseas Construction Co.

Ltd (CGCOC) and the Government of Cameroon’s Ministry of Energy and Water Resources, which was signed on November 13, 2007.

As of December 31, 2020, the loan (GCL) had achieved a 100% disbursement rate and its outstanding amount was equivalent to CFA 8 billion.

Its outstanding amount was equivalent to CFA 12 billion as of December 31, 2016, CFA 10 billion as of December 31, 2017, CFA 9 billion as of December 31, 2018, and CFA 8 billion as of December 31, 2019.

The purpose of the project was to build a water treatment plant with a capacity of 50,000 ton/day and a 20 km long water distribution pipeline in the village of Ayatto (Yato), which is located on the outskirts of Douala along the River Mungo. CGCOC was the EPC contractor responsible for implementation.

Camwater, Cameroon's state-owned water utility company, reportedly provided XAF 7 billion of counterpart funding for Phase 1 and was involved in construction activities. Works began on January 18, 2008 and were completed on June 25, 2010.

There are some indications that the China Eximbank loan for Phase 1 of the Douala (Yato) Water Supply 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.’