China Eximbank provides loan for Libreville Municipal Road Renovation Project (Linked to Record ID#60353)

China Eximbank provides loan for Libreville Municipal Road Renovation Project In 2015, the Government of Gabon signed a loan agreement with China Construction Bank for the Libreville Municipal Road Renovation Project.

In the same year, the Government of Gabon signed a loan agreement with China Eximbank for the Libreville Municipal Road Renovation Project. The precise face values and borrowing terms of these loans are unknown. Record ID#60353 captures the China Construction Bank loan. Record ID#60350 captures the China Eximbank loan.

The loan proceeds were to be used by the borrower to finance an $80 million (CFA 40 billion) commercial contract between the Government of Gabon and China Construction 5th Engineering Division Corp., Ltd. (CCFED) (中建五局土木工程有限公司).

The project involved the renovation of 81 municipal roads scattered in densely populated districts of Libreville, Ndoum, Akanda, and Owendo (measuring 108 km in length). Wuhan Comprehensive Transportation Research Institute Co.

Ltd. was the contractor responsible for project design, and CCFED — a subsidiary of CSCEC — was the contractor responsible for project implementation. Wuhan Comprehensive Transportation Research Institute Co. Ltd. was commissioned to undertake the design of the project in February 2016. Then, on May 20, 2016, a groundbreaking ceremony took place in the town of Okala.

The commercial contract with CCFED specified an 10 month implementation period and the project was expected to reach completion by March 9, 2017. It was ultimately completed, but its precise completion date is unknown.

There are some indications that the China Eximbank and China Construction Bank loans for the Construction and Libreville Municipal Road Renovation Project may have financially underperformed vis-a-vis the original expectations of the lender.

In mid-2014, a decline in international oil prices generated sharp reductions in Gabon’s oil exports and fiscal revenues. The country’s rising fiscal deficit led to the accumulation of arrears to external creditors.

By 2017, the stock of the Government of Gabon’s external arrears stood at $115 million, including arrears to China, Canada, Germany, Spain, France, Israel, and South Korea. All of these arrears were successfully cleared by 2020. However, the Government of Gabon accumulated $3 million of additional arrears to Chinese creditors in 2020.

By the end of May 2021, ‘the stock of [the Government of] Gabon’s external arrears stood at CFAF 98.03 billion (US$182.1 million), including CFAF 23.8 billion (US$44.2 million) vis-à-vis multilaterals and CFAF 21.05 billion (US$39.1 million) vis-à-vis government agencies and private creditors insured with companies from Paris Club member countries and from China [ICBC and China Construction Bank] CFAF 1.3 billion (US$2.42 million).

The Government's strategy for the clearance of existing external arrears consists of focusing primarily on multilateral debt, bilateral debt, insured commercial commitments and seeking agreements with other creditors prior to the IMF Board meeting. Accordingly, we will clear the arrears vis-à-vis the multilaterals.

We will also clear bilateral and commercial-insured arrears as follows: (i) Austria CFAF 6.83 billion (US$12.69 million); (ii) France CFAF 11.9 billion (US$22.11 million); (iii) Israel CFAF 2.23 billion (US$4.13 million); and Spain CFAF 0.09 billion (US$0.17 million).

Regarding the other commercial arrears vis-à-cis AFREXIMBANK (CFAF 7.52 billion or US$13.97 million, and commercial non-insured vis-à-vis France CFAF 0.7 billion (US$1.24 million), Austria CFAF 8.71 billion (US$16.18 million), and Morocco CFAF 1.01 billion (US$1.87 million), we contacted these creditors individually to obtain from them the non-objection agreement.

The same communication was made with China to which our bilateral payment arrears are about CFAF 34.01 billion (US$63.17 million).’ Then, in 2022, the IMF reported that the Government of Gabon’s external arrears to Chinese creditors stood at $23.9 million as of December 2021 and $1 million in June 2022.

There are some indications that the China Eximbank loan for the xx Project may have financially underperformed vis-a-vis the original expectations of the lender.

On April 3, 2024, Gabon’s Ambassador to China transmitted a letter (reference number: 000115/AMBAGAB-RPC/24) to the transitional authorities in Gabon, urging them to consider a debt settlement mechanism whereby the Government of Gabon would repay its outstanding debts to China Eximbank by depositing the cash proceeds from the sale of 1 or 2 oil cargoes (worth $150 million per cargo) each year to UNIPEC in a China Eximbank-controlled escrow account.