Active Mixed AidData Chinese Aid

ZTE provides $64.39 million USD supplier's credit loan to Uzbektelecom for delivery of equipment in 2022

$64.39M USD

Funder	ZTE Corporation (formerly Zhongxing Telecommunication Equipment Corporation)
Recipient Organization	Uzbektelecom JSC
Country	Uzbekistan
Start Date	Oct 17, 2022
End Date	Feb 08, 2032
Duration	3,401 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`111041`

Grant Description

ZTE provides $64.39 million USD supplier's credit loan to Uzbektelecom for delivery of equipment in 2022 On 17 October 2022, Uzbektelecom entered into a supply agreement with ZTE Corporation for the delivery of equipment totaling USD 64,393,880.78 (equivalent to 818,952,924 thousand soums) (S1UZ2022022002FDD) Under the terms of the agreement, 15% of the total contract amount is payable in advance, while the remaining 85% is payable over a two-year period following the end of a grace period.

The repayment is structured as six equal quarterly installments, with a 0% interest rate, and the final payment due by 26 December 2027. Deliveries under the contract commenced in 2024, with goods received under three separate purchase orders.

At initial recognition, the liability was measured at fair value using a market interest rate of 9.7%, which was observable for similar instruments at the time of the transaction.

As of December 2023, the amount outstanding balance is 0 Uzbekistan Soums; As of December 2024, the loan's amount outstanding is 576,993,493,000 Uzbekistan Soums.

📋 Staff Comments

This loan is interest-free. The 9.7% fair market value is an accounting adjustment mechanism: when the loan was first recorded, auditors had to discount the future payments using the prevailing market rate for similar loans (6.7%) to reflect their fair value. Therefore, the future cash outflows (the 8 payments) were discounted back to their present value at 9.7%.
In the 2024 consolidated report, there are references to two maturities for the same loan: December 26, 2027 and June 25, 2027. For the time being, AidData uses December 26, 2027 as the final maturity date because it has a detailed description. This issue warrants more investigation.
In Uzbektelecom's consolidated financial statements starting in 2020 (https://uztelecom.uz/uploads/media/НоваяПапка/Consolidated_financial_statements_of_JSC_Uzbektelecom_2020.pdf) , there is a reference to three new loans committed in 2019. However, the reports do no provide descriptions on these loans. This issue warrants more investigation.

📚 Sources & References

Consolidated report 2020, consolidated report 2021
JSC Uzbektelecom consolidated financial statements 2022
Consolidated report 2023
Consolidated report 2024 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.