Completed Mixed AidData Chinese Aid

China Eximbank lends $195 million for No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project (Linked to Record ID#96221, 98029)

$195M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Myanmar (Burma)
Country	Myanmar
Start Date	Feb 01, 2006
End Date	Feb 05, 2029
Duration	8,405 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`35600`

Grant Description

China Eximbank lends $195 million for No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project On August 6, 2004, China Eximbank and the Ministry of Finance & Revenue of the Union of Myanmar signed an agreement on the Financing Plan for the No. 4 Urea Fertilizer Factory Construction Project in Taikkyi (တိုက်ကြီး) township.

China Eximbank agreed to provide a concessional loan and a buyer’s credit loan at a 3% annual interest rate.

The proceeds of the loans were to be used by the borrower to finance a commercial contract between Huanqiu Contracting & Engineering Corporation (寰球工程公司 or HQCEC) — a subsidiary of CNPC — and the Government of Myanmar's Ministry of Energy, which was signed on March 24, 2004.

Then, in 2005, the Government of Myanmar decided to instead construct 2 separate factories, which led to financing delays.

In February 2006 and July 2007, China Eximbank and the Government of Myanmar signed two loan agreements — a concessional loan agreement and a buyer’s credit loan agreement — for the No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project.

The precise face values of the concessional loan and buyer’s credit loan are unknown.

However, it is known that they were collectively worth approximately $195 million and Myanmar’s Ministry of National Planning and Economic Development reports that one of the loans was worth $74.08 million. The proceeds of these loans were to be used to finance a revised EPC contract with HQCEC. Construction began on March 24, 2004.

However, the project was not officially launched until March 2007.

The construction of the No. 4 Fertilizer Factory [ဓာတ်မြေသြဇာစက်ရုံ (မြောင်းတကာ) or အမှတ်(၄)ဓာတ်မြေသြဇာစက်ရုံနှင့်], which is located in Hmawbi Township, was ultimately completed on December 5, 2010.

The construction of the No. 5 Fertilizer Factory (ပုသိမ် အမှတ် ၅ ဓာတ်မြေဩဇာ စက်ရုံ) was ultimately completed on January 12, 2011.

The No. 5 Fertilizer Factory occupies an area of 200 acres near Ohbo Village within Kangyidaunt (ကန်ကြီးထောင့်) Township, Pathein District, Ayeyawady Region. Upon completion, it was expected produce 500 tons of urea and 325 tons of ammonia a day.

There are some indications that the China Eximbank loan for the No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project may have financially underperformed vis-a-vis the original expectations of the lender.

In 2020, China Eximbank and the Government of Myanmar signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI).

Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Record ID#98029).

Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#96221).

📋 Staff Comments

This project is also known as the Myanmar Fertilizer Project and Myanmar 4A and 4B Fertilizer Plant Project. The No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory are referred to as 4A Factory and 4B Factory by Huanqiu Contracting & Engineering Corporation. No. 5 Fertilizer Factory is also referred to as No. 5 Fertilizer Plant (Pathein). The Chinese project title is 缅甸第四化肥厂 or 缅甸化肥项目. The Burmese project title is ယူရီးယား ဓာတ္ေျမၾသဇာစက္႐ုံ.
It is unclear what the breakdown of financing is between the concessional loan and export buyer's credit. As such, for now AidData codes both flows as a single project record.
Neither the China Eximbank concessional loan nor the China Eximbank buyer’s credit that supported this project are included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 15.0531-years in 2006 and 14.5376-years in 2007. AidData estimates the maturities of the two China Eximbank loans that supported the No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project by taking the average of these two figures. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=05. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 5.7195-years in 2006 and 5.56-years in 2007. AidData estimates the grace periods of the two China Eximbank loans that supported the No. 4 Urea Fertilizer Factory (Myaungtagar) and No. 5 Urea Fertilizer Factory (Kangyidaunt) Construction Project by taking the average of these two figures. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0

📚 Sources & References

China HQCEC Burma fourth fertilizer plant construction completed
Overseas Fruitful Achievements
China’s Huanqiu
Myanmar Petchem ink agreement
SVP of CNPC Mr. Wang Fucheng Visits CNPC’s Subsidiaries in Myanmar
中国寰球工程公司缅甸化肥项目建设纪略
China's Economic Aid to CLMV And Its Cooperation With Them
BURMESE PRIME MINISTER KHIN NYUNT: CHINA FREQUENT FLYER
Myanmar thanks China for its firm support as a true friend on issues that directly connected with interest of Myanmar
我国首个自有技术出口的化肥项目启动
缅甸石化公司第四化肥厂项目取水码头和袋装尿素装船码头
中国寰球工程公司承建缅甸第四化肥厂竣工
Union Minister H.E. U Win Khaing inspects No.4 Fertilizer Factory (Myaungtagar)
Pyidaungsu Hluttaw debates over refinery, fertilizer factories issues
Prime Minister attends opening of No (5) Fertilizer Plant (Pathein)
China's Overseas Development Finance
Over $ 3 billion and nearly 2 billion yuan in loans from China in four years
Myanmar thanks China for its firm support as a true friend on issues that directly connected with interest of Myanmar
China National Petroleum Corporation in Myanmar
Disposal of Pathein No. 5 fertilizer plant is not clean
The New Light of Myanmar
Between 2006 and 2011
Myanmar received more than US $ 3 billion in loans from China and nearly two billion Chinese yuan in loans, the largest amount in the power and energy sectors. 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.

All Grantees

Government of Myanmar (Burma)

Interested in applying for this grant?

Complete our application form to express your interest and we'll guide you through the process.

Apply for This Grant