China Eximbank provides $423 million preferential buyer's credit for Phase 1 of Kribi Deep Sea Port Project (Linked to Record ID#53396, #53116)

China Eximbank provides $423 million preferential buyer's credit for Phase 1 of Kribi Deep Sea Port Project On January 12, 2011, China Eximbank signed a preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC No.(2011) 1 TOTAL NO.(152) No. 1420303052011210025] with the Republic of Cameroon worth $423,000,000 USD for Phase 1 of Kribi Deep Sea Port Project.

The proceeds of the PBC were to be used by the borrower to finance 85% of the total cost ($497,468,255) of a commercial contract between China Harbour Engineering Company Limited and Cameroon's Ministry of Economy, which was signed on December 8. 2009.

The Republic of Cameroon originally agreed to cover the remaining 15% of the project cost, but it later renegotiated and reportedly did not pay for this component of the project.

The loan (PBC) was collateralized with the revenues of the Autonomous Port of Kribi, which were to be deposited by the borrower into a CFA franc revenue account (known as the ‘control account’), and a minimum cash balance in a separate escrow account (compte séquestre).

Under the terms of a Repayment Mechanism Agreement with China Eximbank and Banque Atlantique (the Escrow Agent), the borrower was expected to deposit all project (port) revenues in the control account and maintain a minimum cash balance in a separate escrow account (compte séquestre) equivalent to two, semi-annual debt service (principal, interest, and fee) payments.

As of December 31, 2020, the loan (PBC) had achieved a 100% disbursement rate. The loan’s outstanding amount was equivalent to CFA 191.5 billion as of December 31, 2020.

The purpose of the project was undertake the first phase of the construct of a deep seaport in the Atlantic coast town of Kribi, 300 km south of Yaounde. Upon completion, the main port was expected to receive large vessels with a capacity close to 100,000 tons. Construction began on January 10, 2010, and an official groundbreaking ceremony took place on October 8, 2011.

Construction was completed by the end of 2014, but was not commissioned until March 30, 2015. Record ID#350 captures the China Eximbank PBC for Phase 1 of the Kribi Deep Sea Port Project.

China Eximbank also provided financing for Phase 2 of the Kribi Deep Sea Port Project via a GCL (as captured via Record ID#53116) as well as a PBC (as captured via Record ID#53396).

Following a call for tenders, the right to manage the container terminal of the port was awarded to a consortium made up of CHEC and two French companies, Bolloré and CMA CGM, while the right to operate the multipurpose terminal went to the consortium of the French Necotrans and the Cameroonian Kribi Port Multi Operators (KPMO).

There are some indications that the China Eximbank loan for the first and second phases of the Kribi Deep Sea Port 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.’ However, in its 2023 annual report, La Caisse Autonome d'Amortissement du Cameroun (CAA) noted that the borrower had complied with the minimum account balance requirement under its Repayment Mechanism Agreement for Phase 1 of the Kribi Deep Sea Port Project with China Eximbank.