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Signature of Loan Agreement for the Financing of Moshoeshoe I International Airport Improvement Project in the Kingdom of Lesotho
A Loan Agreement was signed today in Maseru, in the Kingdom of Lesotho and Kuwait Fund for Arab Economic Development, whereby the Fund will make a loan of Kuwaiti Dinars 4.5 million (KD 4,500,000) equivalent to about US$15.3 million to assist in the financing of the Moshoeshoe I International Airport Improvement Project.
The Loan Agreement was signed on behalf of the Kingdom of Lesotho by Her Excellency Ms.Mamphono Khaketla Minister for Finance, and on behalf of Kuwait Fund for Arab Economic Development by Mr. Hamad S. Al-Omar, Deputy Director-General of Kuwait Fund in attendance of His Excellency Mr. Hassan Bader Al-Oqab, Ambassador of the State of Kuwait to the Republic South Africa and Mr. Abdul Rahman Al-Hashim, Regional Manager for Central, East and South African Countries at the Fund.
The Project aims to support the economic and social development of the Kingdom of Lesotho through increasing the handling capacity and improving the quality of services at the Moshoeshoe I International Airport to meet the existing and forecast demand for passengers and freight transport efficiently and safely in compliance with International Civil Aviation Standards, to attract new airline operators, and to support the development of regional and international trade and tourism.
The Project includes the improvement of the airside infrastructure, including the main runway, taxiways and apron, and the improvement and expansion of the landside facilities and passenger handling and security services for the passengers' terminal and the administration buildings. The Project also includes consultancy services for design update and supervision of construction, and institutional support for airport management.
The Project is expected to start during the first quarter of 2016, and is expected to be completed by the end of 2019.
The total cost of the Project is estimated at about Maloti 1.1 billion, equivalent to about K.D 22.7 million, of which about K.D 17.8 million, representing about 78% of the total cost of the Project, will be in foreign exchange.
The Kuwait Fund Loans will cover about 20% of the total costs of the Project and the Borrower also intends to obtain in addition to the financing to be provided by the Fund for the Project Loans from (i) Arab Bank for Economic Development in Africa to cover about 15.5% form the total cost of the project (ii) the Saudi Development Fund to cover 13% (iii) the OPEC Fund for International Development "OFID" to cover about 15.5% (iv) Abu Dhabi Fund for Development to cover about 19% to assist in completing the financing plan of the Project, while the remaining costs will be covered by the Government of Lesotho.
The loan is made for a term of 22 years, including a grace period of 5 years. The loan will be amortized in 34 semi-annual instalments, the first of which will be due on the first date on which interest or other charge on the loan will fall due after the expiry of the said grace period. The loan bears interest at the rate of 1.5% per annum, in addition to 0.5% per annum to cover administrative charges and other expenses involved in the implementation of the Loan Agreement.
By extending this loan, the Fund will have provided 8 loans to the Kingdom of Lesotho, as the Fund already made 7 loans to the Kingdom of Lesotho with a total amount of K.D. 16 million, equivalent to about US$ 54.4 million, for the financing projects in various sectors.