Completed Mixed AidData Chinese Aid

ICBC contributes to $654.1 million syndicated buyer’s credit loan for JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project (Linked to Record ID#42318, #42302, #66737)

$327.08M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Government of Belarus
Country	Belarus
Start Date	Jun 14, 2011
End Date	Dec 01, 2033
Duration	8,206 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`98789`

Grant Description

China Eximbank and ICBC contributions to $654.1 million syndicated buyer’s credit loan for JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project On June 14, 2011, China's Eximbank and the Industrial and Commercial Bank of China (ICBC) and the Government of Belarus signed a $654,163,995 syndicated buyer’s credit loan agreement [№ BLA201104] for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project.

📋 Loan / Grant Terms

💰 Loan Amountcarried an 11

📅 Maturity11.5 years

⏳ Grace Period7.5 years

The loan was scheduled for repayment between January 2019 and January 2023.

AidData estimates that China Eximbank contributed $327,081,997.5 (captured via Record ID#42318) and ICBC also contributed $327,081,997.5 (captured via Record ID#98789) to this syndicated loan.

Then, on April 26, 2012, the Government of Belarus on-lent the proceeds of the loan to a state-owned company called JSC "Svetlogorsk Pulp and Cardboard Mill" (or ОАО «Светлогорский целлюлозно-картонный комбинат» or ОАО "СветлогорскХимволокно”).

JSC "Svetlogorsk Pulp and Cardboard Mill" then used the loan proceeds to finance approximately 85% of the cost ($800 million) of a commercial contract that it signed with China CAMC Engineering Co., Ltd. (CAMCE) on October 11, 2010.

The purpose of the project was to support the construction of a bleached sulfate production facility at the cellulose and cardboard plant in the city of Svetlogorsk.

Upon completion, it was envisaged that the facility would have the capacity to produce 400,000 tons per year of bleached sulphate cellulose (used in paper and cardboard production).

CAMCE was the general (EPC) contractor responsible for implementation and it appears to have hired CMEC as a subcontractor. Construction began on or around May 28, 2012. The project was completed on December 10, 2017. However, it encountered a number of problems during and after implementation. CAMCE allegedly violated building codes and supplied defective equipment.

A strong and unpleasant odor was also reported within the vicinity of the newly constructed facility. As of 2019, the facility was not fully operational.

The China Eximbank/ICBC loan that was issued for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project also financially underperformed vis-a-vis the lenders' original expectations.

JSC "Svetlogorsk Pulp and Cardboard Mill" could not fully service its debts to China Eximbank and ICBC and the Ministry of Finance of Belarus had to step in and provide partial loan repayment. JSC "Svetlogorsk Pulp and Cardboard Mill" is a loss-making enterprise that has not shown a net profit since 2012.

At the beginning of 2019, the company's total debt (about $900 million) was significantly higher than the value of its fixed assets.

📋 Staff Comments

This project is also known as the Bleached Sulfate Cellulose Plant Construction Project. The Russian project title is «Строительство завода по производству сульфатной беленой целлюлозы на базе открытого акционерного общества «Светлогорский целлюлознокартонный комбинат» or проекта «Строительство завода по производству сульфатной беленой целлюлозы». The Chinese project title is 建的白俄罗斯40万吨纸浆厂项目 or 斯韦特洛戈尔斯克年产40万吨纸浆厂建设项目.
The $654 million China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset published by Boston University’s Global Development Policy Center in December 2020. The Government of Belarus’ sovereign bond prospectus states that the Chinese Government has lent $1,000,800,000 to the Government of Belarus for pulp and paper industry activities. This amount is almost exactly equivalent to the sum of the value of the two CDB loans in 2012 and 2014 for the Dobrush Paper Factory Upgrading Project (captured in Project ID#66992 and Project ID#66993) and the China Eximbank loan in 2011 for the JSC Svetlogorsk Cellulose and Cardboard Factory Construction Project (captured in Project ID#42318).
China Eximbank also provided a $29.75 million buyer’s credit loan to JSC 'Svetlogorsk Pulp and Cardboard Mill” in 2014, which is captured in Project ID#66737.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
The exact size of China Eximbank and ICBC’s respective financial contributions to the $654.1 million syndicated loan are unknown. For the time being, AidData assumes that both members of the lending syndicate contributed equal amounts ($327,081,997.5)

📚 Sources & References

Belarus to use Chinese loan to build pulp mill, 400,000T/A BLEACHED KRAFT PULP PLANT PROJECT IN BELARUS, Об уточнении отдельных показателей республиканского бюджета на 2018 год
Belarus
China Exim Bank sign $1bn loan agreements to finance joint projects
China to grant Belarus loan to build bleached sulfate pulp plant
EXIMBANK OF CHINA TO LEND $654M FOR BELARUSIAN BLEACHED PULP FACTORY PROJECT, УКАЗ ПРЕЗИДЕНТА РЕСПУБЛИКИ БЕЛАРУСЬ, ПЕРЕЧЕНЬвнешних государственных займов, обслуживание и погашение которых осуществляются с привлечением средств республиканского бюджета ( LIST of external government loans, servicing and repayment of which are carried out with the involvement of funds from the republican budget)
白俄罗斯40万吨纸浆厂项目, Светлогорский ЦКК. Производство гофрокартона, гофротары, пиломатериалов, бумажных мешков, сотовых заполнителей, бумаги для гофрирования., Светлогорский целлюлозно-картонный комбинат — Википедия, Жители Светлогорска опасаются резкого ухудшения экологической обстановки в регионе Читать полностью: https://news.tut.by/economics/284620.html?c, О мерах по реализации Указа Президента Республики Беларусь от 22 декабря 2017 г. No 460, Постановление Совета Министров Республики Беларусь от 09.01.2012 № 25 'О некоторых вопросах реализации соглашения с Экспортно-импортным банком Китая и Индустриально-коммерческим банком Китая', Правительство Белоруссии спасает госпредприятия за счёт налогоплательщиков, ПОСТАНОВЛЕНИЕ СОВЕТА МИНИСТРОВ РЕСПУБЛИКИ БЕЛАРУСЬ
中工国际白俄罗斯40万吨纸浆厂75%产能测试一次成功
中国进出口银行提供6.54亿美元用于白俄罗斯漂白纸浆厂建设
白俄罗斯林业与造纸工业康采恩：中方开始白俄罗斯漂白纸浆厂建筑工程设计工作, ПОСТАНОВЛЕНИЕ СОВЕТА МИНИСТРОВ РЕСПУБЛИКИ БЕЛАРУСЬ 4 мая 2009 г. No 572
Belarus signs commercial contracts with China totaling $3.5 bln
UPDATE 1-China boosts CIS role with $1 bln Belarus deal
China’s Camce to build bleached sulfate production facility in Belarus
China to grant Belarus loan to build bleached sulfate pulp plant
China's Overseas Development Finance, Светлогорский ЦКК : дешивизна технологий 'от китайских товарищей'
CМИ: Власти подозревают китайцев в саботаже завода в Светлогорске 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.