Completed Mixed AidData Chinese Aid

Donfang Electric Corporation provides supplier’s credit worth RMB 680 million for acquisition of 69 locomotives (Linked to Record ID#35120 and #56552)

¥680K RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Dongfang Electric Corporation (DEC)
Country	Pakistan
Start Date	Jul 01, 2003
End Date	Jan 04, 2033
Duration	10,780 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`56551`

Grant Description

Donfang Electric Corporation provides supplier’s credit worth RMB 680 million for acquisition of 69 locomotives In 2001, the Chinese Government and the Government of Pakistan signed an agreement to supply 69 locomotives and 175 passenger coaches worth $100 million to Pakistan for the modernization of its railway system.

Under the terms of the agreement, China Eximbank agreed to provide export seller’s credits to cover 87.5% of the financial requirements of the supplier credits that two Chinese firms would offer to Pakistan Railways (PR). The remaining 12.5% would be arranged by Pakistan Railways.

📋 Loan / Grant Terms

📅 Maturity18 years

⏳ Grace Period3 years

China National Machinery and Equipment Import and Export Corporation (CMC) would be responsible for exporting the 175 passenger carriages, while Dongfang Electric Corporation (DEC) would be responsible for providing 69 modern locomotive engines worth $100 million within a period of two years.

Under the agreement,15 complete locomotives were to be manufactured in China, while the remaining 54 were to be assembled in Pakistan. China was to provide both spare parts and technology.

According to a 2003 China Eximbank Annual Report, China Eximbank agreed to provide an RMB 650 million (roughly the equivalent of $100 million at the conversion rate of the time) seller's credit to China National Machinery and Equipment Import and Export Corporation in March 2003.

Then, in July 2013, China Eximbank signed a similar agreement with Donfang Electric Corporation for two seller's credits (one worth RMB 680 million and another worth $4.6 million) to support the latter's export of 69 locomotives to Pakistan Railway.

Record ID#35120 captures the seller credit from China National Machinery and Equipment Import and Export Corporation (CMC) for the acquisition of 175 railway carriages.

Record ID#56551 and ID#56552 capture the China Eximbank seller’s credits that were issued to Dongfang Electric Corporation (DEC).

📋 Staff Comments

1. China Eximbank offers export seller’s credits to Chinese companies that are implementing overseas projects. These companies may, in turn, use the proceeds of an export seller's credit to make equity investments or provide loans to the host government or other entities in the host country. In this case, China Eximbank provided an RMB 680 million export seller's credit to Donfang Electric Corporation, and Donfang Electric Corporation then used the proceeds of the export seller's credit to lend to Pakistan Railways.

📚 Sources & References

Pakistan
China sign 250 million dollar railway deal
Business in Asia Today - Nov. 16, 2001
China to send 7 more locomotives to Pakistan on Monday
China to supply locomotives, coaches to Pakistan Railways
Pakistan leader
Chinese premier hold 'in-depth talks', accords signed
Pakistan and China sign economic agreements
RAILWAYS-China to provide $200 million soft loan for Pak-Railways - Ashraf.
China s 8 locomotives to Pakistan next week
Was Karachi Express running on suspect Chinese engine?
Was Karachi Express running on suspect Chinese engine?
巴基斯坦铁路发展规划及中巴铁路合作情况
巴基斯坦法院驳回东方电气集团机车采购合同申诉
出口巴基斯坦铁路机、客车项目 Pakistan: locomotives and carriages
PR blacklists Chinese firm supplying 75 locomotives
Pakistan’s Relations with China: A Study of Defence and Strategic Ties during Musharraf Era (1999-2008)
War-games will not impress Pakistan: FO rules out arms race
YEAR BOOK 2011-12 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.