Project ID: 34799

China Eximbank $33.578 million buyer’s credit loan for Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping Project (linked to #34030, #34779)

Commitment amount

$ 52430451.73

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

No

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

2007

2006-06-15

Planned implementation start

Completion

2008

2007-09-15

Planned

2008-04-23

Actual

Description

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).Then, in March 2005, China Eximbank and the Government of Angola signed a $41,242,776.05 subsidiary buyer’s credit loan agreement for the Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping Project (see project #34779) (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 279). The proceeds of this loan were used to partially finance a $45,825,306.72 commercial contract with CAMCO, which was signed on 9 March, 2005 (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS and UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 279).Then, on 19 July, 2007, China Eximbank and the Government of Angola signed a $500 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 plus a 1.5% margin (or 6.86% at the time that the MLFA was signed), a 22 year maturity period, and 5 year grace period (see Project ID#34030). Under this MLFA, China Eximbank and the Government of Angola signed a $33,578,373.95 subsidiary buyer’s credit loan agreement to support “complementary actions” related to the Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288). The proceeds of this loan were used to partially finance a $37,310,415,50 commercial contract with CAMCO (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288).Linked ProjectID#34779 captures the first China Eximbank loan that supported this project, and this project captures the second China Eximbank loan that supported the Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping Project.The purpose of this project, which employed 230 Angolan workers and 158 Chinese workers, was the construction and equipping of two agricultural schools in Kwanza-Sul Province and and Kwanza Norte Province. The Instituto Médio Agrário do Cuanza Norte, or the Medium Agrarian Institute of Kwanza-Norte, is located in Camuaxi locality within Kwanza Norte Province, which is approximately 13 kilometers out of the town Ndalatando. It has 20 classrooms, three boarding houses, 17 residences for teachers, parking lot for agricultural machines, workshops and a five-a-side football field.The contract supporting the project went into effect on 15 June, 2006; and the estimated project handover date was 15 September, 2007. It was inaugurated on 23 April, 2008, by the governor of Kwanza-Norte, Henricque Junior (See: Kwanza-Norte - Agrarian Institute Meets Population's Goals).As of January 2014, the school opened 360 new spaces for students in the 7th through 12th grades (See: Instituto Médio Agrário dispõe de 360 vagas para novos alunos). The Instituto Médio Agrário do Wako Kungo, or the Medium Agrarian Institute of Wako Kungo, is located in the municipality of Cela in Kwanza-Sul Province. Built in 2007, the school had the capacity to train approximately 1050 students as of January 2013 (See: Instituto Médio Agrário do Wako Kungo tem 250 vagas disponíveis).

Additional details

AidData considers this loan to be collateralized in a de facto sense. The cash desposited 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.In July 2020, AidData asked Dr. Lucy Corkin, a leading expert on Chinese lending to Angola, whether the second, third, and fourth master loan facility agreements (MLFAs) that the Angolan Government signed with China Eximbank in 2007 and 2009 were structured as a buyer’s credit loans like the first MLFA that the Angolan Government signed with China Eximbank in 2004. Dr. Corkin noted that the second, third and fourth MLFAs were treated more like ceiling increases to the initial facility. Therefore, for the time being, AidData categorizes the second, third, and fourth MLFAs as buyer's credit loans. Sinosure is also assumed to be involved in this loan facility as 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.

Number of official sources

4

Number of unofficial sources

6

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

CAMCO International [Private Sector]

Accountable agencies [Type]

Loan type

Non-Concessional

Maturity

22 years

Interest rate

6.86%

Grace period

5 years

Management fee

0.3

Grant element

20.53162093%

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).