Project ID: 34785

China Eximbank provides $28.871 million buyer’s credit loan for MECANAGRO Agricultural Equipment Acquisition Project (linked to #42029)

Commitment amount

$ 54380238.78

Constant 2017 USD

Summary

Funding agency [Type]

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

Recipient

Angola

Sector

Agriculture, forestry, fishing (Code: 310)

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

Implementation

2003

2003-11-28

Actual start

Commitment year

2005

Completion

2005

2005-08-26

Actual

NOTE: This project began implementation and then later secured financing from a Chinese funding agency to continue project implementation

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 $28,871,211.60 subsidiary buyer’s credit loan agreement for the MECANAGRO Agricultural Equipment Acquisition Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 281 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS, p. 7). The proceeds of this loan were used to partially finance a $32,079,124.00 commercial contract with CMEC, which was signed on 11 March, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 281 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS Dezembro, 2007). The purpose of this project was to facilitate the acquisition of agricultural equipment by Angola’s state-owned National Agricultural Mechanisation Company (Empresa Nacional de Mecanização Agrícola (Mecanagro)) (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS Dezembro, 2007).The contract for this project was scheduled to go into effect on 29 September, 2005, which may have also been the date when the purchase of the equipment was made. On 26 August, 2005, a handover ceremony of agricultural machinery equipment and tools from China National Machinery and Equipment Import and Export Corporation (a likely subcontractor to CMEC) was held in Luanda (See: 中安经贸一揽子合作农机项目顺利实施). A total of more than 300 sets of tractors, bulldozers, graders, combine harvesters and irrigation equipment and corresponding accessories, as well as tools such as axe, sickle and chain saw were delivered (See: 中安经贸一揽子合作农机项目顺利实施). China National Machinery and Equipment Import and Export Corporation also built an after-sales service center including maintenance workshops, parts warehouses, and offices in Luanda, and announced that it would establish four provincial technical service and personnel training centers (See: 中安经贸一揽子合作农机项目顺利实施).This project is distinct from Project ID#34786, which captures another China Eximbank loan to purchase other agricultural tools.

Additional details

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

5

Number of unofficial sources

2

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

China Machinery Engineering Corporation (CMEC) [State-owned Company]; Empresa Nacional de Mecanização Agrícola (Mecanagro) [State-owned Company]; Government of Angola [Government Agency]

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 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).