Loan Agreement with Islamic Republic of Mauritania
Sunday, 16 March 2008
A Second Loan Agreement was signed today in Nouakchott between the Islamic Republic of Mauritania and Kuwait Fund for Arab Economic Development, whereby the Fund will extend a Loan of Kuwaiti Dinars ten million (KD. 10,000,000) equivalent to 35 million U.S. Dollars to help finance Nouakchott Water Supply through Senegal River Project.
The Loan Agreement was signed on behalf of the Government of Mauritania by H.E. Mr. Abdulrahman Ould Ham Fazaz The Minister of Economy & finance, and on behalf of the Fund by Mr. Ghanem Sulaiman Al-Ghenaiman, Deputy Director General of the Kuwait Fund for Arab Economic Development.
The Project aims at covering the persistent insufficiency in water supply in Nouakchott and the nearly villages from the main transport line of water til the town of Nouakchott up to the year 2020, with a production capacity of about 170,000 m3 daily for a total population estimated by about 1.8 million, and with the possibility to increase the water production in the future to cover expected demand till the year 2030.
The project includes the construction of a water intake at the Senegal River and raw water pumping station at 1.8m3/sec. primary water treatment plant with a capacity of 170,000 m3/day, a main pumping station of 1.8 m3/sec., as well as laying of water pipelines of total length about 200 km, of diameter 1100 and 1400 mm, and a final water treatment plant. It also includes the construction of major water storage tank 130,000 m3 near Nouakchott and a main water distribution tank 5000 m3 within the city as well as the installation of electrical power transmission lines and command and control system and the consulting services as well as the institutional support of the project implementation unit.
The total cost of the project was estimated during the evaluation of the project in 2003 at about KD. 66.1 million (about US$ 231 million) of which the foreign currency is equivalent to US$ 182 million which represents about 79% of the total cost of the project. The Fund’s First Loan (equal to KD. 10 million) covered about 15% of the total cost of the project. The Arab Fund for Economic and Social Development, The Saudi Fund for Development, the Islamic Development Bank and the African Development Fund contributed in financing the project with loans, the total value of them is about KD 45.75 million (i.e. about US$ 160 million) whereby, the Government of Mauritania participated in financing the remaining balance of the project cost, in addition to its commitment to cover any extra expenses in its financing.
Taking in consideration the increase in the bid value, and the increase it the oil price and the Euro in the international markets, the cost of the project according to the price estimation was higher to what was initially calculated. Therefore, the total cost of the project reached about KD. 129 million (about US$ 451.5 million) of which about KD. 111 million (about US$ 388.5 million) in foreign currency which represents about 86% of the total cost of the project. Therefore the Mauritanian Government had to ask co-financiers of the project to increase their contribution. The various financing institutions agreed to increase their contributions willingly. In addition to the above, the OPEC Fund accepted to participate in the financing of the project.
The First and Second Loans – after their integration together - will be for a period of 24 years including 5 years grace period, and will be amortized in 48 semi-annual installments. The Loan bears an interest at 1.5% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement. Therefore the Fund Loan will cover 15.5% of the total project cost.
Upon signature of this Loan Agreement, this loan will be the 14th one extended by the Fund to the Islamic Republic of Mauritania considering that the Fund had already extended to Mauritania 13 loans, the total amount of them is about KD. 56 million (i.e. about US$ 197 million) to finance projects in transport, industry and water supply sectors. In addition to the above, the Fund had extended to the Islamic Republic of Mauritania 7 technical assistance, the total value of them is about KD. 986 thousand (i.e. US$ about 3.45 million) which was fully withdrawn. On the other hand, the Government of the State of Kuwait had extended 3 Grants, the total value of which is about KD. 3 million (i.e. about US$ 10.5 million) to cover to the cost of some projects in water and social sectors.