China Eximbank provides $16.67 million buyer’s credit loan for Kwanza-Norte and Kwanza-Sul Municipal Hospital Construction and Equipping Project (linked to #42029, #34030, #34831)

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 October 2005, China Eximbank and the Government of Angola signed a $16,674,955.20 subsidiary buyer’s credit loan agreement for the Kwanza-Norte and Kwanza-Sul Municipal Hospital 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 $18,527,728.00 commercial contract with CAMCO, which was signed on 29 October, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 278). The purpose of this project, which employed 25 Angolan workers and 25 Chinese workers, was to construct and equip two municipal hospitals in Cazengo within Kwanza-Norte Province and Sumbe within Kwanza-Sul Province (See: LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007).The contract for this project began in two phases on 1 November, 2006 and 17 November, 2006 (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS). The projected handover dates for the two phases of the project were 1 February, 2008, and 17 February, 2008, respectively (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 received additional financing a China Eximbank $500 million credit line in September 2007 (see linked Project ID#34831 and ID#34030).

Additional details

The Portuguese project title is Construção e Apetrechamento de 2 Hospitais Municipais no Kwanza Norte Cazengo) e Kwanza Sul (Sumbe).This project is distinct from a Chinese Government-financed project to build two health centers in Kwanza-Norte Province (see Project ID#34783). 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

4

Number of unofficial sources

3