China Eximbank provides $36.47 million loan for Benguela Regional Hospital Restoration and Reconstruction Project (linked to #42029, #34830)

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 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 May 2005, China Eximbank and the Government of Angola signed a $36,469,557.90 subsidiary buyer’s credit loan agreement for the Benguela Regional Hospital Restoration and Reconstruction Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 279). The proceeds of this loan were used to partially finance a $40,521,731.00 commercial contract with Sinohydro Engineering Bureau 4 Co., Ltd. This project involved the restoration and rehabilitation of a hospital in the city of Benguela (called Hospital Geral de Benguela) with 37 rooms and approximately 400 beds. It employed 57 Angolan workers and 30 Chinese workers (See: LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007).The contract supporting the project was scheduled to go into effect on 3 June, 2006 and it had an estimated handover date of 3 September, 2007; however, the actual project implementation start and end dates are 3 March, 2006 and 13 August, 2008, respectively.This project also received complementary financing from a 2007 China Eximbank loan (see ProjectID#34830).

Additional details

The Portuguese project title is Reabilitação e Apetrechamento do Hospital de Benguela. The Chinese project title is 安哥拉本格拉中心医院项目 or 班戈拉中心医院项目.In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it identifies this loan as carrying a 17 year maturity length; however, AidData records a maturity length of 22 years based on interview evidence that Dr. Ana Cristina Alves collected from Angola’s Ministry of Finance (see Project ID#42029).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

8

Number of unofficial sources

3