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

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 $53,044,838.28 subsidiary buyer’s credit loan agreement for the Luanda and Benguela Technical School Construction Project (see project #34776) (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 279). The proceeds of this loan were used to partially finance a $58,938,709.20 commercial contract with China Machinery Engineering Corporation (CMEC), which was signed on 10 March, 2005.This project also received a supplementary $26,564,950 loan from China Eximbank through a $500 million credit line (see Project ID#34030) extended to the Government Angola on 19 July, 2007 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288-289). This subsidiary loan carried the following terms: 6.86% interest rate, 5 year grace period, and 22 year maturity. The proceeds of the loan were used to partially finance a supplementary commercial contract with SINOMACH worth $29,515,500 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 288). Linked ProjectID#34776 captures the first loan, and this project captures the second, supplementary loan.This 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. The contract supporting the project went into effect on 20 March, 2006 and the estimated project handover date was 22 May, 2007 (See: LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007). This project was completed, but its precise implementation start and end dates are unknown. The school in the Sambizanga municipality (Instituto Médio Politécnico do Sambizanga) was inaugurated on 12 June, 2007.

Additional details

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.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.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.

Number of official sources

3

Number of unofficial sources

2