Project ID: 34031

China Eximbank extends $6 billion master loan facility agreement to Angola (linked to #66690)

Commitment amount

$ 7822290085.0

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

Vague

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

Implementation (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment year

2009

Description

On 18 November, 2009, China Eximbank entered into a Master Loan Facility Agreement (MLFA) that was later amended on 8 June, 2011, to provide a $6 billion loan to Angola (See: THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048 p. 130 and The EU and China in African Authoritarian Regimes: Domestic Politics and Governance Reforms, p. 180 and Presidential Decree No. 208/11 and Bartering Globalization: China’s Commodity backed Finance in Africa and Latin America, p. 350 and Resolution No. 124/09 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. 153-154 and 2015 Government of Angola Bond Prospectus, p. 107).The amount available under the MLFA is a function of the number of barrels of oil per day sold by Sonangol to Chinese importers designated by China Eximbank. The amount available under this MLFA increases from a minimum of $3.0 billion to a maximum of $6.0 billion, with increments of $1.0 billion, depending on the number of barrels per day sold by Sonangol to China Eximbank's designated importers (See: 2015 Government of Angola Bond Prospectus, p.107). The MLFA is a framework agreement under which the Government of Angola and China Eximbank may conclude ILAs 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. 129-130).As of 31 December, 2017, $1.605 billion had been drawn down from this MLFA (see Project ID#66690 for the project capturing this drawn down amount) (See: THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, p. 129-130). The loan terms of this MLFA are unclear.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). 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. Further details of this MLFA, including the projects it funded and their respective disbursements, are unclear.This project is linked to ProjectID#66690, which captures the drawn down amount of this MLFA.

Additional details

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. 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.

Number of official sources

5

Number of unofficial sources

8

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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

No Information

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).