Project ID: 34786

China Eximbank provides $20.131 million buyer’s credit loan for Agricultural Equipment, Machinery and Tools Acquisition Project (linked to #42029)

Commitment amount

$ 39798754.48

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

Commitment year

2004

2005-09-29

Planned implementation start

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 August 2004, China Eximbank and the Government of Angola signed a $20,131,281.00 subsidiary buyer’s credit loan agreement for the Agricultural Equipment, Machinery and Tools 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 $22,368,090 commercial contract with CMEC that was signed on 11 August, 2004 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 281). The purpose of this project was to facilitate the acquisition of agricultural equipment, machines and tools for MECANAGRO and Instituto de Desenvolvimento Agrário (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS, p. 7).This project's contract was set to go into effect on 29 September, 2005, which may have also been the date when the acquisition was completed. According to the Angolan Ministry of Finance, this project did reach completion; however, its precise implementation end date is unknown (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS, p. 7).This project is distinct from Project ID#34785, which captures another China Eximbank loan that facilitated the acquisition of agricultural equipment for MECANAGRO.

Additional details

In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it records the face value of the loan for this project as $22 million; however, this value corresponds to the value of the commercial contract rather than the value of the buyer’s credit, which financed 90% of the value of the commercial contract. AidData relies on the face value of the loan ($20,131,281) reported in Dr. Lucy Corkin’s book ('UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA”), which is based on extensive fieldwork and interviews with Angolan Government officials.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

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]; Instituto de Desenvolvimento Agrário [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).