Solomon Islands secures $66 million loan from China to build Huawei telecom towers

Published:

19 Aug 2022 10:25 GMT

The authorities of the oceanic country described the agreement as “an historical financial association” with Beijing.

The Solomon Islands have secured a $66 million loan from China to install 161 mobile phone towers, which will be supplied by Chinese telecoms equipment maker Huawei, according to a release official published on Thursday.

The authorities of the oceanic country, which described the agreement as “a historic financial association” with Beijing, they hope to roll out the project in the next three years. In addition, they aim to complete the construction of almost half of the towers before the Pacific Games to be held in Honiara in July 2023. “This should allow people, especially in rural areas, to enjoy the Games even if they don’t come to Honiara,” they said.

The project “will be fully financed with a concessional loan from EXIM Bank of China […] at an interest rate of 1%, for a period of 20 years,” they specified.

According to the Permanent Secretary of the Solomon Islands Ministry of Finance and Treasury, McKinnie Dentana, an independent review of the proposal showed that the project “would generate enough income so that the government could fully repay both the principal amount of the loan and the interest costs within the agreed period.

Too ambitious?

However, according to a copy obtained by ABC of what would be the report by the consulting firm KPMG, which analyzes an earlier more ambitious proposal to build 200 towers instead of 161, the plan “significantly exaggerates the potential for financial return.”

The report warns that the project would generate a financial loss of almost 100 million dollars. And while he says the project’s risks are “manageable,” he says the planned three-year rollout is “too ambitious” and “doesn’t seem realistic.”

• In May, Chinese presented ten Pacific countries a major economic and security agreement to strengthen ties in various areas, including police cooperation. However, the plan was rejected by the countries of the region.
• In April, Beijing and the Solomon Islands they signed a security agreement. Within the framework of this, the Solomon Islands government could ask the Asian giant to send police and military personnel to help stabilize the country and protect Chinese diplomats and companies in the event of possible social unrest, such as those that occurred in April 2006 and November of 2021.