E182m data centre loan not cancelled – Neal

MANZINI – Government says it has not cancelled the E182 million (US$10.4 million) Exim Bank of India loan secured for the construction of the Data Recovery Site (DRS) in Siteki.

The clarification comes after Finance Minister Neal Rijkenberg’s recent remarks in Parliament were interpreted to mean that government had sought cancellation of the loan facility.

According to the Ministry of Finance, the minister was referring to the cancellation of commitment fees being charged on the undisbursed portions of the loans and not the cancellation of the loans themselves.

“The loans secured from Exim Bank India have not been cancelled,” the ministry said.

“When the minister referred to cancellation, he was referring to the cancellation of the commitment fees being charged on the undisbursed portions of the loans, and not the cancellation of the loans themselves,” said Setsabile Dlamini, the Communications Officer in the Ministry of Finance.

This development follows questions sent to the minister seeking an explanation on government’s position regarding the DRS loan, which was secured in 2021.

Questions had been raised over why government would seek cancellation of financing secured for an important national ICT infrastructure project, particularly after the minister told Parliament that the country needed a functional primary data centre before proceeding with a disaster recovery facility.

The Ministry of Finance has now stated that the loan arrangements provided for an initial one per cent disbursement to facilitate project development.

“This amount was disbursed for both projects,” the ministry said.

It further stated that Exim Bank subsequently undertook the necessary project-development work and that the relevant documentation was submitted to facilitate further utilisation of the loans.

The main issue raised by government with Exim Bank was, therefore, not the cancellation of the financing facility, but the commitment fees being charged on the portions of the loans that had not yet been drawn down.

Government engaged the Indian bank on the matter, according to the ministry.

“Exim Bank India has since confirmed that the commitment fees will be stopped,” the ministry said.

This means that the DRS financing remains available, although the extent to which the facility can be utilised and under what conditions remains subject to further engagement.

The ministry said any consideration regarding the restructuring, extension or alternative use of the financing would have to be discussed between the relevant government institutions and Exim Bank India.

The clarification also raises questions about the status of the DRS project and the sequencing of the country’s data-centre infrastructure.

The questions sent to Rijkenberg had sought clarity on whether government had determined, before securing the 2021 loan, that a primary data centre needed to be established before the DRS.

They also sought an explanation of previous statements attributed to ICT Minister Savannah Maziya that the DRS construction had been halted because of a forensic investigation into the RSTP project.

The Finance Ministry’s response did not directly address the reasons for the delay in implementing the DRS project or reconcile the different explanations surrounding the project.

It instead clarified the status of the Exim Bank financing and the commitment fees.

The ministry also did not disclose the amount of commitment fees that government had paid before Exim Bank agreed to stop charging them.

Questions had been raised about the financial implications to taxpayers of maintaining an undisbursed loan facility, including the total commitment fees paid to date.

The latest clarification means that, contrary to earlier reports or interpretations, government has not lost the Exim Bank financing.

However, the continued availability of the facility leaves questions over when the funds will ultimately be utilised, whether the original project design will remain unchanged and whether the financing can be applied to other data-centre infrastructure.

The Ministry of Finance said any future restructuring, extension or other use of the financing would be subject to engagement between the relevant government institutions and Exim Bank India.

It also apologised for any misunderstanding arising from the minister’s reference to ‘cancellation’.

“If the minister’s reference to ‘cancellation’ was understood to mean cancellation of the loans, we wish to clarify that the reference was to the cancellation of the commitment fees being charged on the undisbursed portions of the loans,” the ministry said.

“We regret any misunderstanding this may have caused.”

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