China Eximbank provides $7.2 million buyer’s credit loan for Kwanza-Norte Health Center Construction and Equipping Project (linked to #42029)

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 October 2005, China Eximbank and the Government of Angola signed a $7,206,258.60 subsidiary buyer’s credit loan agreement for the Kwanza-Norte Health Center Construction and Equipping Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 280 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS, p. 6). The proceeds of this loan were used to partially finance a $8.006,954.00 commercial contract with CAMCO, which was signed on 29 October, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 280). The purpose of this project, which employed 62 Angolan workers and 47 Chinese workers, was the construction and equipping of two health centers in Kwanza-Norte Province: one in the town of Dondo and the other in the town of Ndalatando (N'dalatando).The contract for the construction of the two health centers had two start dates: 10 October, 2006, and 25 October, 2006. The expected projected handover dates were 10 October, 2007, and 25 September, 2007, respectively. An inauguration ceremony for the health center was held on 6 April, 2010, but it is unclear when construction on this project began and concluded (See: Inauguração do Centro de Saúde agrada habitantes do Dondo).This project is distinct from the two China Eximbank-financed municipal hospitals in Kwanza-Norte and Kwanza-Sul Provinces that are captured in Project ID#34846.

Additional details

In the appendix to her book, Dr. Lucy Corkin identified two health centers built in Kwanza-Norte and Kwanza-Sul Province; however, documents published by Angola's Ministry of Finance (LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS) indicate that the two health centers were both located in Kwanza-Norte Province. AidData relies on the locational information provided by the Ministry of Finance.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