Project ID: 34800

China Exmbank provides $26.5 million buyer’s credit loan for Luanda and Benguela Technical School Construction Project (Linked to Project ID#34030, #34776)

Commitment amount

$ 47797368.36809697

Adjusted commitment amount

$ 47797368.37

Constant 2021 USD

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Angola

Sector

Education (Code: 110)

Flow type

Loan

Level of public liability

Central government debt

Infrastructure

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

2007-07-19

Planned start

2006-03-19

Planned complete

2007-05-22

Actual complete

2007-06-12

NOTE: Red circles denote delays between planned and actual dates

Geography

Description

On November 28, 2003, the Chinese Government and the Angolan Government 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 March 2, 2004, China Eximbank entered into a $2 billion Master Loan Facility Agreement (MLFA) with the Government of Angola. All borrowings under the MLFA, which is an oil prepayment facility, carried the following estimated borrowing terms: a 21.5 maturity, a 1.5 year grace period, an interest rate of 3-month LIBOR plus a 1.5% margin, a 0.3% management fee, and a 0.3% commitment fee. The facility was split between a $1.0 billion Phase I facility and a $1.0 billion Phase II facility. Availability of the Phase II facility was subject to confirmation by the lender on or prior to the date falling five years after satisfaction of the conditions precedent to the MLFA and was made available by China Eximbank during that period. The MLFA is a framework agreement under which the Government of Angola and China Eximbank may conclude individual buyer’s credit loan agreements (ILAs or subsidiary loan agreements) for the purpose of financing up to 90% of the contract price owing to certain contractors in respect of certain contracts. The first tranche of the facility was released in December 2004. The facility was fully drawn down as of December 31, 2017. 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. 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. Loan disbursements were made on a project-by-project basis. Tendering, management and payments were jointly managed by the Chinese Ministry of Commerce and the Angolan Ministry of Finance (which coordinated the various Angolan line ministries responsible for supervising the projects). The Angolan Ministry of Finance submitted the projects for tendering; China Eximbank selected Chinese candidate firms for the projects; and a joint commission made the final firm selections. The process was managed by an office in the Angolan Ministry of Finance -- known as Gabinete de Apoio Técnico (GAT) -- that was specifically created to manage the MLFA with China Eximbank. In March 2005, China Eximbank and the Government of Angola signed a $53,044,838.28 subsidiary buyer’s credit loan agreement under the 2004 MLFA for the Luanda and Benguela Technical School Construction Project. The proceeds of the loan were used to partially finance a $58,938,709.20 commercial contract with China Machinery Engineering Corporation (CMEC), which was signed on March 10, 2005. The project also received a supplementary $26,564,950 loan from China Eximbank through a $500 million MLFA (as captured via Project ID#34030), which was extended to the Government of Angola on July 19, 2007. This subsidiary loan carried the following borrowing terms: a 21.5 maturity, a 1.5 year grace period, an interest rate of 3-month LIBOR plus a 1.5% margin, a 0.3% management fee, and a 0.3% commitment fee. The proceeds of the loan were used to partially finance a supplementary commercial contract with SINOMACH worth $29,515,500. Project ID#34776 captures the first loan, while Project ID#34800 captures the second, supplementary loan. The project involved the construction and equipping of four technical schools in the Sambizanga, Cacuaco, Cazenga and Viana localities within Luanda Province and two technical schools in Bairro de Marco in Lobito city in Graça city within Benguela Province. SINOMACH was the EPC contractor responsible for project implementation. The EPC contract supporting the project went into effect on March 20, 2006 and the originally expected project handover date was May 22, 2007. The implementation of the project commenced on April 17, 2006 and it reached completion on June 18, 2007. The school in the Sambizanga municipality (Instituto Médio Politécnico do Sambizanga) was inaugurated on June 12, 2007.

Additional details

1. The Portuguese project title is Construção e Apetrechamento de 2 Institutos Politécnicos na província de Benguela e de 4 Institutos Politécnicos na província de Luanda. 2. 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. 3. 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 would be signing relevant agreements with the Government of Angola. Therefore, AidData has coded Sinosure as an accountable agency and as providing insurance for the loan. 4. 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. 5. For the time being, AidData assumes that the same maturities (21.5 years), grace periods (1.5 years), management fees (0.3%), and commitment fees (0.3%) that applied to the individual loan agreements under the March 2, 2004 MLFA also applied to individual loan agreements under the July 19, 2007 MLFA. This issue warrants further investigation.

Number of official sources

3

Number of total sources

5

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Details

Cofinanced

No

Direct receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

China National Machinery Industry Corporation (Sinomach) [State-owned Company]

Insurance provider [Type]

China Export & Credit Insurance Corporation (Sinosure) [State-owned Company]

Collateral provider [Type]

Sociedade Nacional de Combustiveis de Angola (Sonangol) [State-owned Company]

Collateral

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. The volume of oil to be sold to UNIPEC each month for repayment of the loan varied according to market oil prices.

Loan Details

Maturity

22 years

Interest rate

6.86%

Grace period

2 years

Grant element (OECD Grant-Equiv)

12.7881%

Bilateral loan

Export buyer's credit

Investment project loan

Pre-export financing or Commodity prepayment financing