China Eximbank provides $504.3 million preferential buyer’s credit for Port Gentil-Omboue Road and Bridge Construction Project (Linked to Record ID#60747)

China Eximbank provides $504.3 million preferential buyer’s credit for Port Gentil-Omboue Road and Bridge Construction Project On September 9, 2013, the Government of Gabon and China Eximbank signed a government concessional loan (GCL) agreement worth RMB 810 million (or approximately $121 million) for the Port Gentil-Omboue Road and Booué Bridge Construction Project.

On October 7th, 2013, the Government of Gabon and China Eximbank also signed a USD-denominated preferential buyer’s credit (PBC) agreement for the Port Gentil-Omboué Road and Ogooué River Booué Bridge Construction Project. The face value of the PBC was $504,305,301 USD.

The proceeds from the GCL and the PBC were used to finance a $663 million EPC contract with China Road and Bridge Corporation (CRBC).

Approximately 95% of the cost of this project was financed by China Eximbank while the remaining 5% was financed by the Government of Gabon itself. The GCL that supported this project is captured in Record ID#60747. The PBC that supported this project is captured in Record ID#73174.

The project involved the construction of a 93.26 km two-way, two-lane highway from Port Gentil to Omboué (with an asphalt concrete surface, a subgrade width of 12 meters, and a subgrade width of 10 meters), the construction of three bridges (the 4707 meter Ogooué River Bridge, the 367 meter Booué Bridge, and the 4577 meter Nkomi Laguna Bridge) measuring 13 km in length, and the construction of 141 culverts.

CRBC was the contractor responsible for project implementation. It received an order to commence construction on March 20, 2014. Then, a formal groundbreaking ceremony took place on July 3, 2014. The project was handed over on December 23, 2020.

There are some indications that the China Eximbank loans for the Port Gentil-Omboue Road and Bridge Construction 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.

According to the Gabon Directorate General for Debt, both loans are currently in the process of being repaid.