PRESIDENT Edgar Lungu’s government has again defaulted on its US$107 million loan for the purchase of two C27J twin-engined Spartan military transport planes procured from Italy’s Leonardo.
According to Africa Confidential, Zambia has defaulted on its €97 million (US$107m) loan from Italian bank Intesa San Paolo for the purchase of two C27J twin-engined military transport aircraft from Italy’s Leonardo.
The loan was agreed in June 2018 shortly after then finance minister Margaret Mwanakatwe pledged to curb additional borrowing to prevent an imminent debt crisis.
Africa Confidential says Zambia defaulted on its first payment on the loan due in May this year, eventually paying on 3 June.
“A further €6.2m was due on 30 October. The Italian bank has issued five requests for payment,” according to documentation seen by Africa Confidential, “but no payment had been made by the time we went to press. Zambia also owes a penalty of €23,000 in default interest, which is running at two per cent a week.”
Africa Confidential notes that Zambia’s aircraft buying spree also included the Gulfstream G650 business jet used by President Lungu and an order for five Sukhoi airliners, which was reduced to one $50m VIP version. Russia cancelled the order on October 28 after Zambia failed to make its second payment.
“The down-payment, taken from Treasury funds, is unlikely to be repaid,” African Confidential says. “Finance minister Bwalya Ng’andu recently wrote to several lenders to stop them disbursing funds, part of an effort to get debts under control…But lenders objected and the disbursements had to go ahead. Without a significant windfall, it is likely Zambia will default on its Eurobonds next year. We understand Zambia is now considering restructuring the bonds. A clumsy attempt to obtain such a windfall by ordering the liquidation of mining company Konkola Copper Mines and the sale of the asset has left Zambia with hefty costs for the resultant court case brought by KCM’s major shareholder Vedanta and the mine.”
On the other hand, Africa Confidential notes that Zambia is also trying to repay South Africa’s state power utility Eskom $40m in order to secure a deal for emergency power, after Eskom refused because of unpaid debts.
According to the manufacturer, Leonardo, the Spartan is rugged, reliable, proven and versatile.
“The C-27J Spartan, the most effective multi-mission medium turboprop airlifter available on the market today, is able to operate from the most rudimentary airstrips and in extreme environmental conditions,” it says. “With 85 aircraft already sold to 15 operators across five continents, the C-27J offers high operational effectiveness together with competitive costs, extreme flexibility and interoperability with larger airlifters.”
Among other countries using or ordered the military air units include Zambia, Australia, Bulgaria, Chad, Italy, Greece, Kenya, Lithuania, Mexico, Morocco, Peru, Romania, Slovakia, Greece, Mexico, Peru, and the US.