China Eximbank provides $3.6 million buyer’s credit loan for Huambo Health Center Construction and Equipping Project (linked to #42029, #34030)

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 March 2005, China Eximbank and the Government of Angola signed a $3,603,129.30 subsidiary buyer’s credit loan agreement for the Huambo Health Center Construction and Equipping Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 280 ). The proceeds of this loan were used to partially finance a $4,003,477.00 commercial contract with Sinohydro, which was signed on 24 October, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 280). The purpose of this project, which employed 30 Angolan workers and 25 Chinese workers, was to construct and equip a health center in Bairro de Sao Pedro within Kasseque II municipality and Huambo province (See: LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007).The contract for this project was scheduled to go into effect on 1 August, 2006 and the scheduled handover date was 1 August, 2007 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 280). The project was ultimately completed, according to SAIS-CARI, but its precise implementation start and end dates are unknown.This project may have received additional financing from a China Eximbank $500 million credit line that the Government of Angola secured in September 2007 (see linked Project ID#34030).

Additional details

The Portuguese project title is Construção e Apetrechamento 1 Centro de Saúde no Huambo. The project is referred to as 万博健康中心项目 in Chinese. This project is distinct from the Huambo Central Hospital Rehabilitation and Equipping and Ambulance Acquisition Project, which was financed by the same China Eximbank MLFA (see Project ID#34844).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

6

Number of unofficial sources

2