Project ID: 34030

China Eximbank extends $500 million master loan facility agreement to Angola for complementary actions (linked to #42029)

Commitment amount

$ 780717550.6

Constant 2017 USD

Not recommended for aggregates

This project is not recommended for use in creating aggregated sums. See the documentation for more information about this criteria.

Umbrella project

This project is classified as an "umbrella" project, and is connected to related projects.

Summary

Funding agency [Type]

Export-Import Bank of China [State-owned Policy Bank]

Recipient

Angola

Sector

Other multisector (Code: 430)

Flow type

Export Buyer's Credit

Concessional

No

Category

Intent

Mixed (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 year

2007

Description

On 19 July, 2007, China Eximbank entered into a $500 million Master Loan Facility Agreement (MLFA) with Angola (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 2 and THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, p. 130 and EASTERN PROMISES: NEW DATA ON CHINESE LOANS IN AFRICA, 2000 TO 2014 p. 20 and China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148 and 中国贷款在安哥拉电力部门使用率最高 and Obras e Projectos do Governo and 2015 Government of Angola Bond Prospectus, p. 107).This MLFA was meant to finance complementary actions to a 2004 MLFA (see project #42029). This facility financed a total of 18 contracts, which were complementary actions to corresponding sub-projects of the #42029 MLFA (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 2-3 and Obras e Projectos do Governo). The MLFA is a framework agreement under which the Government Angola and China Eximbank may conclude individual buyer’s credit loan agreements (ILAs or subsidiary loan agreements) for the purpose of financing up to 90% of the contract price owing to certain contractors in respect of certain contracts (See: THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, p. 130). This facility was fully drawn down as of 31 December, 2017 (See: THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, p. 130).ILAs approved through the MLFA carry an interest rate of 3-month LIBOR 3 plus a 1.5% margin, a management commission fee of 0.3%, an installation commission fee of 1%, and an immobilization fee of 0.3% (See: Angola Public Expenditure Review (In Two Volumes) Volume II: Sectoral Review, p. 19). The coded interest rate for this project is: 6.86%. This interest rate was calculated by taking the average 3 month LIBOR rate in July 2007 (5.36%) and adding a 1.5% margin. According to interview evidence that Dr. Ana Cristina Alves gathered from Angola’s Ministry of Finance, the MLFA has a 22 year maturity period and 5 year grace period (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148).Sonangol provided a source of collateral for the loan, and repayment is to be done with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which are to be deposited in the Angolan Ministry of Finances (MINFIN) account at China Eximbank (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148). The volume of oil to be sold to UNIPEC each month for repayment of the loan, varies according to market oil prices. Under the agreement, 70% of works have to be contracted with Chinese companies and the same proportion of construction material, equipment and labour has to be contracted in China (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 149). Loan disbursements are made on a project-by-project basis. The tendering, management and payment of projects are jointly managed by the Chinese Ministry of Commerce and the Angolan Ministry of Finance (who coordinates the Ministries undertaking the projects in Angola). MINFIN submits the projects for tendering, China Eximbank selects the Chinese candidates running for each project, and a joint commission makes the final selection (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 149).On 9 June, 2015, Angola and China Eximbank entered into amendments of this MLFA and others in order to realign payments of drawn amounts under certain ILAs with the revised schedules of progress and/or completion of certain specified public investment projects, the timing and/or scale of which was altered when the revised 2015 national budget was adopted in March 2015 (See: THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, p. 130). However, it is unclear whether the loan terms of this particular MLFA were amended.This credit line is distinct from the a $2 billion MLFA also extended by China Eximbank in September 2007 (see project #31742).The following is a list of projects financed through this facility (as of 30 June, 2008) (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288-292): Project #34795, a $26.55 million loan for the Huambo and Bié Agricultural School Construction ProjectProject #34797, a $10.767 million loan for the Malanje Agricultural School Rehabilitation ProjectProject #34799, a $33.578 million loan for the Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping ProjectProject #34800, a $26.564 million loan for the Luanda and Benguela Technical School Construction ProjectProject #34802, a $9,024,750 loan for the Luanda and Benguela Secondary School Construction and Equipping ProjectProject #34822, a $13.297 million loan for the Malanje Secondary School Construction Project and Huíla Polytechnic Institute and Secondary School Construction ProjectProject #34824, a $12.795 million for the Cabinda Technical Institute Construction and Equipping ProjectProject #34826, a $9.593 million loan for the SE PS05-Catete Road Expansion Project and Phase 2 of Luanda Electricity Grid Rehabilitation and Expansion ProjectProject #34827, a $20.613 million loan for the Caxito Electricity Network (MT, BT, and IP) Rehabilitation and Expansion and 60Kv Quifangondo-Cazenga Transmission Line Rehabilitation ProjectProject #34828, a $8.8 million loan for the Huambo Water Supply Network Expansion ProjectProject #65, a $25.918 million loan for the construction of Quifangondo water treatment station, Caruaco water distribution center, and Luanda household water connectionsProject #34829, a $4.865 million loan for water supply activities in Catete, Caxito, and UigeProject #34830, a $68.325 million loan for the Huambo, Malanje, Benguela, and Huila Regional Hospitals ProjectProject #34831, a $65.359 million loan for complementary actions for 7 municipal hospitals and 9 health centersProject #34832, a $9.787 million loan for complementary actions for the Caculama Municipal Hospital Construction and Equipping ProjectProject #66, a $50.7 million loan for the 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation ProjectProject #34833, a $36 million loan for the Refrigeration Truck and Isothermal Vehicle Acquisition ProjectProject #34834, a $53.5 million loan for the 418,750 Telecommunication Lines Construction Project

Additional details

AidData considers this loan to be collateralized in a de facto sense. The cash desposited by the Angolan Ministry of Finance into a bank account controlled by China Eximbank is, for all intents and purposes, a source of collateral. This is true even if the lender does not have a formal security interest in the account.In July 2020, AidData asked Dr. Lucy Corkin, a leading expert on Chinese lending to Angola, whether the second, third, and fourth master loan facility agreements (MLFAs) that the Angolan Government signed with China Eximbank in 2007 and 2009 were structured as a buyer’s credit loans like the first MLFA that the Angolan Government signed with China Eximbank in 2004. Dr. Corkin noted that the second, third and fourth MLFAs were treated more like ceiling increases to the initial facility. Therefore, for the time being, AidData categorizes the second, third, and fourth MLFAs as buyer's credit loans. Sinosure is also assumed to be involved in this loan facility as the 2003 framework agreement (中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议) specified that Sinosure will be signing relevant agreements with the Government of Angola, although the nature of the agreements is unclear.

Number of official sources

7

Number of unofficial sources

10

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

Angola Ministry of Finance [Government Agency]

Accountable agencies [Type]

Loan type

Non-Concessional

Maturity

22 years

Interest rate

6.86%

Grace period

5 years

Management fee

0.3

Grant element

20.53162093%

Gurarantee provided

No

Insurance provided

Yes

Collateralized/securitized

Yes

Collateral

Sonangol provided a source of collateral for the loan, and repayment is to be done with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which are to be deposited in the Angolan Ministry of Finances (MINFIN) account at China Eximbank (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148). The volume of oil to be sold to UNIPEC each month for repayment of the loan, varies according to market oil prices. Under the agreement, 70% of works have to be contracted with Chinese companies and the same proportion of construction material, equipment and labour has to be contracted in China (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 149).