China Eximbank provides $678.3 million buyer's credit loan for Project to Supply Potable Water to Yaoundé and its Outskirts from the River Sanaga (PAEPYS)

China Eximbank provides $678.3 million buyer's credit loan for Project to Supply Potable Water to Yaoundé and its Outskirts from the River Sanaga (PAEPYS) On January 20, 2015, China Eximbank and the Ministry of Economy, Planning and Regional Development of the Republic of Cameroon signed a buyer's credit loan (BCL) agreement (Contract No. 1410302052014212898) worth $678,300,000 for the Project to Supply Potable Water to Yaoundé and its Outskirts from the River Sanaga (PAEPYS).

The borrower was also required to purchase buyer's credit insurance from Sinosure.

The proceeds of the BCL were to be used by the borrower to finance 85% of the total cost of a commercial contract ($798,000,000) between Cameroon's Ministry of Water Resources and Energy and China National Machinery Industry Corporation (Sinomach), which was signed on October 28, 2014.

As of December 31, 2020, the loan (BCL) had achieved a 49.4% disbursement rate (with an undisbursed balance of CFA 184.1 billion) and its outstanding amount was equivalent to CFA 179.7 billion.

By September 2022, the National Committee on Public Debt recorded that USD 35167,3 millions (351,673,000) had been disbursed for the PAEPYS project (Record ID #57333).

The purpose of the project is to supply potable water to Yaoundé, Batchenga, Obala, Nkometou, Soa and Ntui from the Sanaga River via the construction of a 62 km pipeline.

According to Annex A of the loan agreement, the "main objective of the project is as follows: the construction of a water station on the river Sanaga at the place called Nachtigal; the construction of a potable water treatment plant with a nominal capacity of [300,000] cubic meters/day; the installation of raw water supply pipes and treated water with a diameter of 1800 mm ductile pig iron on a total distance of about 62 km including their protecting equipments and piping system accessories; the construction of two water absorption stations at Nkometou II and at Nyom II; the construction of a storage tank of 6,000 cubic meters in Yaoundé on Mount Ndindan and connecting pipes to existing reservoirs in the Yaoundé city; the construction of a high voltage electric line from Oyom Abang to Nkometou II; the construction of average voltage lines from Nkometou II towards Nyom II, Batchenga and Nachtigal; the supply of 18 vehicles for works and management of installations (one truck with lifting crane, two Toyota Coasters, two Toyoto Land Cruiser, two Toyota Pick up Hilux, three Toyota Prado, five Toyota Berline Corolla); the installation of a remote management system of facilities built within the project framework; the construction and installation of any related infrastructure and equipment; the supply of spare parts.

Upon completion, the project is expected to produce 300,000 m3 (cubic meters) of water per day, expandable to 400,000 m3 (cubic meters) per day, and its implementation is expected solve the problem of insufficient potable water supply in Yaoundé, the capital of Cameroon. Construction began in December 2014 and was expected to reach completion by December 2017.

However, as of September 2018, the project had only achieved a 30% completion rate.

The first batch of equipment that was acquired with the proceeds of the loan -- in particular, the water pipes -- was received in October 2017 and forwarded to the project's storage sites in Nkometou. As of October 2020, the project had only achieved a 68% completion rate due to delays caused by the Covid-19 pandemic.

Work was also delayed due to the late release of rights of way and the non-payment of Sinomach’s invoices for several months.

Project implementation was accelerated between October 2020 and October 2021; in particular, there was a significant increase in the laying of pipes from 800 meters in 2020 to 27 kilometers in 2021.

These and other actions undertaken through October 2021 brought the overall completion (physical execution) rate of the project to 81.5%.

As of October 2021, the Nachtigal raw water collection and pumping station had achieved a 97% completion rate; the water treatment plant at Emana Batchenga had achieved a 98.5% completion rate; the 90kV/30kV transformer substation at Nkometou had achieved a 97.6% completion rate; the treated water pumping station at Nkometou had achieved a 96.1% completion rate; the treated water pumping station at Nyom had achieved a 61% completion rate; the Ndindan treated water tank had achieved a 5.2% completion rate; and the project component focused on the laying of pipes from Nachtigal to Yaounde had achieved a 36% completion rate.

The project achieved a physical execution rate of 100% on April 20, 2024, and the official commissioning ceremony occurred on August 20, 2024.

There are some indications that the China Eximbank loan for the Project to Supply Potable Water to Yaoundé and its Outskirts from the River Sanaga (PAEPYS) 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.’