Myanmar Railways is set to buy
Chinese materials, technology and services for two train construction
projects, as China has pledged to finance them with US$92 million loan
at 2 percent interest rate, according to sources close to the projects.
One project will manufacture railway
carriages, and another will build locomotives. Ninety percent of total
cost of the two projects will be financed by the loan from Chinese
Export-Import Bank (EXIM Bank), said the source on anonymity.
Myanmar Railways signed two agreements
for the projects with China National Machinery Import & Export
Corporation on July 17, 2013.
The railway carriage construction
project was valued at US$54.070 million, and China EXIM Bank will loan
US$48.663 million, i.e. 90 percent value of the project, to Myanmar. The
rest cost will be borne by Myanmar government.
Likewise, the locomotive construction
project was valued at US$47.916 million, and the Chinese bank will help
with US$43.124 million loan.
The two Chinese loans combined together
will amount to 91.757 million. Their interest rate was agreed at 2
percent; the administrative fee at 0.25 percent; and the undertaking fee
at 0.25 percent. Myanmar will have to make repayment of the loan in 20
installments in 15 years.
One of the conditions of the loans is
that Myanmar must buy from China the materials, technology and services
required for the projects.
Myanmar took these loans as part of the
total US$400 million credit the then Chinese Premier agreed with
Myanmar’s previous military government in 2010. The loans, being already
in the budget, were not discussed in parliament.
Myanmar has recently signed another
US$100 million loan with China for its micro-credit projects in rural
areas. The Chinese loan’s interest rate was set 4 percent.
Observers criticize that China charges
too high interest for its loans to Myanmar. They highlighted the
Japanese assistance loans charge only 0.01 percent interest.
source: Eleven Myanmar
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