‘Unrealistic' India Exim Bank deal: What next after projects stall?

The construction of the Base-Butaro-Kidaho tarmac road and 10 technical vocational education and training (TVET) centers of excellence has come to a halt due to the demanding requirements set under the financing agreement between the Government of Rwanda and the Export-Import Bank of India (India Exim Bank), it has emerged. The Base-Butaro-Kidaho road project, spanning 63 kilometers and located in the Northern Province, was intended to connect the districts of Rulindo and Burera, including key infrastructure as well as link the country to Uganda through the Cyanika border. However, despite the signing of a $66.6 million concessional loan agreement between Rwanda and India in May 2018, the road construction has yet to commence. ALSO READ: Why Base-Kidaho road project stalled The Ministry of Infrastructure revealed to senators in 2021 that the loan from India Exim Bank imposed unfavorable conditions, resembling tied aid where most of the construction materials, approximately 65 to 70 percent, were required to come from India. Imena Munyampenda, the Director General of Rwanda Transport Development Agency (RTDA), expressed concerns about the feasibility of importing stones and sand via air cargo. These factors led the government to seek alternative options for financing the Base-Butaro-Kidaho road. Consequently, the government is now collaborating with the China Road and Bridge Corporation (CRBC) and a local civil engineering and construction company called NPD. Under a pre-financing agreement, CRBC and NPD will undertake the road construction, with the government making payments in installments. The construction is expected to commence in the upcoming fiscal year, starting on July 1, 2023. In the meantime, the Ministry of Infrastructure has decided to redirect the loan funds toward energy initiatives. In addition to the road project, the construction of 10 TVET centers of excellence has also been stalled. A $81 million credit line agreement was signed in 2017 between Rwanda and India Exim Bank to establish these vocational training centers and business incubation centers in various districts. The project, aimed at improving technical education and reducing unemployment, was expected to be completed in 2023 but has faced implementation challenges. During a budget hearing on May 8, Paul Umukunzi, the Director General of Rwanda TVET Board (RTB), told MPs about the difficulties arising from the agreement that mandates Indian companies to carry out all project activities and that the contract stipulated that 75 percent of materials have to be sourced from India. Delays in approval and revisions to match market prices have further hindered progress. As of April 30, 2023, Rwf831 million has already been spent on the project. Umukunzi expressed concerns about the viability of continuing the project due to persistent delays and the inflexible requirements imposed by India Exim Bank. Discussions are ongoing to determine whether the project remains feasible and worth pursuing. The stalling of the Base-Butaro-Kidaho road and TVET centers underscores the challenges faced under the India Exim Bank deal, raising questions about the future of these vital projects in Rwanda.

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‘Unrealistic' India Exim Bank deal: What next after projects stall?