China Eximbank provides $190.5 million buyer’s credit loan for 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation Project (linked to #42029, #34030, #66)

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 February 2005, China Eximbank and the Government of Angola signed a $190,515,690.59 subsidiary buyer’s credit loan agreement for the 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 282). The proceeds of this loan were used to partially finance a $211,684,100.65 commercial contract with China Road and Bridge Corporation (CRBC), which was signed on 8 February, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 282 and The China Central Mainstream Media Press Corps Visits CRBC Angola Office).This project also received a supplementary $50,702,850.00 loan from China Eximbank through a $500 million credit line (see Project ID#34030) extended to the Government Angola on 19 July, 2007. This subsidiary loan carried the following terms: 6.847% 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 CRBC worth $56,336,500.00 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 291). This project captures the first loan, and Project ID#66 captures the second, supplementary loan.The purpose of this project, which employed 1336 Angolan workers and 367 Chinese workers, was the rehabilitation of a 357 km highway between Quifangondo and Negage via Caxito and Uige. The starting point of the road is in the town of Kifangondo, a northern suburb of Luanda City. It extends northward through the city of Caxito, the capital of Bengo Province and the city of Uige, the capital of Uige Province. The road terminates in the city of Negage, an important agricultural town within Uige Province.The contract supporting the project went into effect on 13 December, 2005; and the estimated project handover date was 30 June, 2008. The project officially commenced on 13 December, 2005; and a project handover ceremony took place on 30 August, 2008 (See: 中安经贸一揽子合作公路修复项目). The project was later inspected on 8 March, 2014 by MOFCOM (ECCO) officials (See: 驻安哥拉使馆经商处视察中国路桥承建的罗安达-威热公路).

Additional details

This project is also known as the 371 km Kifangondo-Caxito-Uige-Negage Highway Rehabilitation Project or the 221 Road Project. The Chinese project title is 安哥拉吉方刚多－卡西托－威热－加吉道路修复项目 or 基凡冈都 --卡希托 -- 威热 -- 内加热公路 or 安哥拉211项目 or Kifangondo-Negage道路改建项目.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

8

Number of unofficial sources

2