Project ID: 34776

China Exmbank provides $53 million buyer’s credit loan for Luanda and Benguela Technical School Construction Project (linked to #42029, #34800, #85457)

Commitment amount

$ 99912362.93

Constant 2017 USD

Summary

Funding agency [Type]

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

Recipient

Angola

Sector

Education (Code: 110)

Flow type

Export Buyer's Credit

Concessional

Yes

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

2005

Implementation

2006

2006-03-19

Planned start

2006-04-17

Actual start

Completion

2007

2007-05-22

Planned

2007-06-18

Actual

Description

On 28 November, 2003, China and Angola signed a framework agreement pertaining to a special economic cooperation arrangement (Agreement name in Chinese: 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). Following the signing of the framework agreement, on 2 March, 2004, China Eximbank and the Government of Angola signed a $2 billion Master Loan Facility Agreement (MLFA). All of the subsidiary buyer’s credit loans approved through this MLFA carried the following terms: an interest rate of 3-month LIBOR (1.112% at the time that the MLFA was signed) plus a 1.5% margin- totaling 2.612%, a 22 year maturity period, and 5 year grace period (see linked Project ID#42029). According to the World Bank, this MLFA has 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).Sonangol provided a source of collateral for loans under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (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 varied 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).Then, in March 2005, China Eximbank and the Government of Angola signed a $53,044,838.28 subsidiary buyer’s credit loan agreement for the Luanda and Benguela Technical School Construction Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 279). The proceeds of this loan were used to partially finance a $58,938,709.20 commercial contract with China Machinery Engineering Corporation (CMEC), which was signed on 10 March, 2005.This project also received a supplementary $26,564,950 loan from China Eximbank through a $500 million credit line (see Project ID#34030) extended to the Government Angola on 19 July, 2007 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288-289). This subsidiary loan carried the following terms: 6.847% interest rate, 5 year grace period, and 22 year maturity. The proceeds of the loan were used to partially finance a supplementary commercial contract with SINOMACH worth $29,515,500 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288). This project captures the first loan, and Project ID#34800 captures the second, supplementary loan.This project involved the construction and equipping of four technical schools in the Sambizanga, Cacuaco, Cazenga and Viana localities within Luanda Province and two technical schools in Bairro de Marco in Lobito city in Graça city within Benguela Province. The contract supporting the project went into effect on 20 March, 2006 and the estimated project handover date was 22 May, 2007 (See: LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007). This project was completed, but its precise implementation start and end dates are unknown. The school in the Sambizanga municipality (Instituto Médio Politécnico do Sambizanga) was inaugurated on 12 June, 2007.The project was part of Phase I of the commercial contract between Sinomach and the Ministry of Education in Angola to construct 28 schools (captured in #85457). Phase 1 was started on April 17, 2006 and was completed by June 18, 2007.

Additional details

The Portuguese project title is Construção e Apetrechamento de 2 Institutos Politécnicos na província de Benguela e de 4 Institutos Politécnicos na província de Luanda.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 has coded Sinosure as an accountable agency and providing insurance to the loan facility.AidData considers this loan to be collateralized in a de facto sense. The cash deposited 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

4

Number of unofficial sources

3

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

Angola Ministry of Education [Government Agency]; China Machinery Engineering Corporation (CMEC) [State-owned Company]

Accountable agencies [Type]

Loan type

Concessional

Maturity

22 years

Interest rate

2.612%

Grace period

5 years

Management fee

0.3

Grant element

50.58856436%

Gurarantee provided

No

Insurance provided

Yes

Collateralized/securitized

Yes

Collateral

Sonangol provided a source of collateral for loans under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (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 varied 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).