[Cancelled] China Eximbank provides $169 million loan for 130 km Juba-Torit Section of National No. 2 Road (Linked to Record ID#59617)

[Cancelled] China Eximbank provides $169 million loan for 130 km Juba-Torit Section of National No. 2 Road On December 22, 2014, China Eximbank and the World Bank agreed to co-finance the Juba-Nadapal Road Project between South Sudan and Kenya.

This project is also known as the Juba-Torit-Kapoeta-Nadapal Road Project and the South Sudan East Africa Regional Road Project. China Eximbank was responsible for financing 130 km of road between Juba (Nesitu) and Torit in South Sudan.

The World Bank agreed to finance the remaining stretch of road from Kapoeta-Nadapal (including bridges between Kapoeta and Nadapal, upgrading of approximately 40 km of the Kapoeta- Narus road section, and repairs of 190 km of roads between Torit and Kapoeta, and Narus and Nadapal).

This project will provide a connective highway between Kenya and South Sudan, as well as connect Juba with fiber optic cables.

On November 30, 2015, South Sudan's Ministry of Roads and Bridges approved a contract to hire a Chinese consortium of Shandong Hi-Speed Group Corporation and China Shandong International Economic and Technical Cooperation Company to implement the Juba-Torit road section financed by China Eximbank.

Then, on January 9, 2016, China Eximbank approved an oil-backed loan of $169 million to Government of South Sudan for the Juba-Torit section of the highway. The loan proceeds covered 85% of the total cost of the project ($198 million).

Then, in June 2016, China Eximbank informed the World Bank and the Government of South Sudan that the the loan signing could not occur due to increased conflict in South Sudan.

Apart from the direct effects of the security situation on the feasibility of carrying out road works, China Eximbank was concerned about the effects of the drop in international oil prices and the consequent risk of economic collapse of South Sudan, given that their loan agreement with South Sudan was based on an oil-backed loan agreement.

After July 8, 2016, all project activities were on a 'pause' due to the renewed crisis in South Sudan. Then, on September 7, 2017, the Government of South Sudan and China Eximbank signed the loan agreement in China.

The World Bank officially notified the Government of South Sudan of the cancellation of its project in a letter to the Minister of Finance dated August 15, 2018, and the cancellation officially took effect on September 14, 2018.

As of early 2019, China Eximbank's loan agreement had lapsed and become invalid because the Government of South Sudan did not meet its contractual conditions for effectiveness and disbursement.

One of these unmet conditions in China Eximbank's facility agreement with the Government of South Sudan was a “Condition Precedent of Initial Utilization” that the borrower must produce documentation from the World Bank confirming that “the procurement process for the works, monitoring, and several consultancy services as described in the letter delivered by the World Bank . . . dated July 20, 2017, has successfully completed and that the World Bank is ready to disburse under the IDA Financing Agreement."