China Eximbank provides $66.898 million buyer’s credit loan for Next Generation Network Project in Bengo, Bie, Kwanza-Norte, Kwanza-Sul, Luanda, Malange, and Moxico Provinces (linked to #42029, #34918, #34919, #34920)

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 2006, China Eximbank and the Government of Angola signed a $66,898,156.50 subsidiary buyer’s credit loan agreement for the Next Generation Network (NGN) Project in Bengo, Bie, Kwanza-Norte, Kwanza-Sul, Luanda, Malange, and Moxico Provinces (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 286 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 21). The proceeds of this loan were used to partially finance a $74,331,285.00 commercial contract with China Machinery Engineering Corporation (CMEC), which was signed on 13 February, 2006 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 286 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 21).The NGN Project sought to build/install a 3,459 km fiber optic network using next generation technologies in 141 localities within the following 14 provinces: Bengo, Bie, Kwanza Norte, Kwanza Sul, Luanda, Malange, Moxico, Huambo, Huila, Cunene, Uige, Zaire, Benguela and Cabinda (See: LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 21).The contract supporting the Next Generation Network (NGN) Project in Bengo, Bie, Kwanza-Norte, Kwanza-Sul, Luanda, Malange, and Moxico Provinces went into effect on 24 October, 2006 and the estimated project handover date was 8 April, 2009 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 286 and LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008, p. 21). The project ultimately commenced on 7 August, 2007 and ended 19 March, 2010 (See: 海外工程).Three additional China Eximbank loans supported the NGN Project (see Project ID #34918, #34919, and #34920). Several of these loans supported the same provinces, but they are separate loans for separate sub-projects of the larger NGN Project.

Additional details

The Portuguese project title is Construção da Rede de Nova Geração (NGN) para as Províncias do Bengo, Bié, K.Norte, K.Sul, LDA, Malange e Moxico (projecto1). The Chinese project title is 安哥拉通讯项目 or 安哥拉电信石油信贷项目 or 安哥拉通讯项目光缆及用户线工程.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

9

Number of unofficial sources

5