Project ID: 30542

China Eximbank provides buyer’s credit loan for GECOMSA Telecommunications Project (Linked to Project ID#484)

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Equatorial Guinea

Sector

Communications (Code: 220)

Flow type

Loan

Level of public liability

Other public sector debt

Financial distress

Yes

Infrastructure

No

Category

Intent

Commercial (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2012-01-01

Actual complete

2012-02-01

Description

In 2006, China Eximbank and the Government of Equatorial Guinea signed a $2 billion oil-backed buyer’s credit facility agreement for various infrastructure projects (captured in Project ID#484). All subsidiary loans approved under this facility agreement carry the following terms: a 5.5% interest rate, a 5 year maturity, and a 2 year grace period. In 2012, China Eximbank and the Government of Equatorial Guinea subsequently signed a subsidiary buyer’s credit loan agreement for the GECOMSA Telecommunications Project. The face value of the loan is unknown. The purpose of the project was to establish a telecoms joint venture called Guinea Ecuatorial Comunicaciones Sociedad Anónima (GECOMSA). In January 2012, GECOMSA was launched, becoming the third telecommunications operator in Equatorial Guinea. During the presentation of this company, the director Maria del Mar Bindang Eneme, reported that 51% of the shares in GECOMSA are held by the Government of Equatorial Guinea and 49% are held by ZTE Corporation. GECOMSA was created to overcome the shortcomings that are occurring in the telecommunications sector and is the third communication company in Equatorial Guinea. The inauguration ceremony for GECOMSA was attended by, among others, the Minister of National Security, Nicolas Obama Nchama, the Minister of Internal Affairs and Local Corporations, Clemente Engonga Nguema Onguene, and the Chinese Ambassador to Equatorial Guinea, Wang Shixiong. GECOMSA officially opened on February 1, 2012. By September 2016, GECOMSA was teetering on the edge of bankruptcy and facing serious allegations of corruption and embezzlement. One allegation is that the Minister of Security, Nicolas Obama Nchama, repeatedly solicited bribes from ZTE Corporation. By September 2020, GECOMSA had accumulated salary arrears, rental arrears, arrears to China Eximbank, arrears to GITGE Equatorial Guinea, and arrears to ORTEL; its outstanding debts were reportedly worth CFA 4 billion.

Additional details

1. The Chinese project title is 兴公司和赤几政府共同投资成立的赤几通信公司(GECOMSA). 2. This loan is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020.

Number of official sources

8

Number of total sources

13

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Details

Cofinanced

No

Direct receiving agencies [Type]

Equatorial Guinea Communications Corporation (GECOMSA) [Joint Venture/Special Purpose Vehicle]

Implementing agencies [Type]

ZTE Corporation [State-owned Company]

Government of Equatorial Guinea [Government Agency]

Collateral

The buyer's credit loans under the $2 billion USD facility were secured via deposit accounts opened by Government of Equatorial Guinea in China Eximbank. The Government of Equatorial Guinea deposited the proceeds from hydrocarbon exports into these accounts.A repayment guarantee equivalent to 30 percent (minimum) of the outstanding stock of debt was required to be in the accounts at all times.

Loan Details

Maturity

5 years

Interest rate

5.5%

Grace period

2 years

Grant element (OECD Grant-Equiv)

9.6724%

Bilateral loan

Export buyer's credit

Investment project loan

Project finance