China Eximbank provides $60.581 million buyer’s credit loan for construction and equipping of technical, agricultural, and administrative institutes and a secondary school in Luanda-Sul, Luanda-Norte, Uige, and Moxico Provinces (linked to #42029)

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 July 2006, China Eximbank and the Government of Angola signed a $60,581,824.02 subsidiary buyer’s credit loan agreement for the construction and equipping of technical institutes, agricultural institutes, administrative institutes, and a secondary school in Luanda-Sul, Luanda-Norte, Uige, and Moxico Provinces (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 284 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 14). The proceeds of this loan were used to partially finance a $67,313,137.80 commercial contract with Sinohydro, which was signed on 27 July, 2006 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 284 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 14).This project, which employed 453 Angolan workers and 205 Chinese workers, involved the construction and equipping of 3 polytechnic (technical) institutes in Luanda-Sul Province, Luanda-Norte Province and the town of Bairro Kandande (within Uige Province); one agricultural institute in Uige Province; two administrative and management institutes in the city of Uige within Uige Province and the town of Bairro Quituma within Moxico Province; and one secondary school in the town of Bairro Benvindo within Uige Province (See: Obras do Governo - Educação).The contract supporting the project was set to begin on 15 August, 2007. According to Sinohydro, construction began in August 2007. Additional information about the implementation status of each technical institute, administrative and management institute, and school as of June 2008 can be found on pages 14-16 of ''LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008''. According to Sinohydro, construction on the Angola Lunda Norte Province Secondary School didn't commence until 15 August, 2012 (See: Angola Lunda Norte Province Secondary School Construction Project (project under construction)).

Additional details

The Portuguese project title is Construção e Apetrechamento de 3 Institutos Politécnicos na Lunda Sul, Lunda Norte e Uíge, de 1 Instituto Médio Agrário no Uíge, de 2 Institutos de Administração e Gestão no Uíge e no Moxico e de 1 Escola Secundária no Uíge. The project is referred to as 安哥拉七所学校建设项目 in Chinese by Sinohydro. 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

7

Number of unofficial sources

2