Project ID: 34923

China Eximbank provides $26.866 million buyer’s credit loan for Phase 2 of the Malanje Province Electricity Network (MT and BT) Rehabilitation and Expansion Project (Linked to Project ID#42029)

Commitment amount

$ 40959846.54835352

Adjusted commitment amount

$ 40959846.55

Constant 2021 USD

Summary

Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]

Recipient

Angola

Sector

Energy (Code: 230)

Flow type

Loan

Level of public liability

Central government debt

Infrastructure

Yes

Category

Intent

Mixed (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment

2008-01-01

Actual complete

2010-01-01

Geography

Description

On November 28, 2003, the Chinese Government and the Angolan Government 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 March 2, 2004, China Eximbank entered into a $2 billion Master Loan Facility Agreement (MLFA) with the Government of Angola. All borrowings under the MLFA, which is an oil prepayment facility, carried the following estimated borrowing terms: a 21.5 maturity, a 1.5 year grace period, an interest rate of 3-month LIBOR plus a 1.5% margin, a 0.3% management fee, and a 0.3% commitment fee. The facility was split between a $1.0 billion Phase I facility and a $1.0 billion Phase II facility. Availability of the Phase II facility was subject to confirmation by the lender on or prior to the date falling five years after satisfaction of the conditions precedent to the MLFA and was made available by China Eximbank during that period. The MLFA is a framework agreement under which the Government of Angola and China Eximbank may conclude individual buyer’s credit loan agreements (ILAs or subsidiary loan agreements) for the purpose of financing up to 90% of the contract price owing to certain contractors in respect of certain contracts. The first tranche of the facility was released in December 2004. The facility was fully drawn down as of December 31, 2017. Sonangol provided a source of collateral 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. 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. Loan disbursements were made on a project-by-project basis. Tendering, management and payments were jointly managed by the Chinese Ministry of Commerce and the Angolan Ministry of Finance (which coordinated the various Angolan line ministries responsible for supervising the projects). The Angolan Ministry of Finance submitted the projects for tendering; China Eximbank selected Chinese candidate firms for the projects; and a joint commission made the final firm selections. The process was managed by an office in the Angolan Ministry of Finance -- known as Gabinete de Apoio Técnico (GAT) -- that was specifically created to manage the MLFA with China Eximbank. In 2008, China Eximbank and the Government of Angola signed a $26,866,210.66 subsidiary buyer’s credit loan agreement under the MLFA for Phase 2 of the Malanje Province Electricity Network (MT and BT) Rehabilitation and Expansion Project. The proceeds of this loan were used to partially finance a $29,851,345.18 commercial (EPC) contract with an unidentified firm (contractor). The purpose of this project was rehabilitate and expand electricity networks in Malanje Province. This project reached completion in 2010, according to the Angolan state-owned electricity company Empresa Nacional de Electricidade.

Additional details

1. The Portuguese project title is Reabilitação e Expansão das redes MT e BT de Malange. The Chinese project title is 卡库苏城市电网网改造项目. 2. The contractor for the project is likely China National Cable Engineering Corporation. This issue requires further investigation. 3. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it records the face value of the loan for this project as $27 million; however, this value corresponds to the value of the commercial contract rather than the value of the buyer’s credit, which financed 90% of the value of the commercial contract. AidData relies on the face value of the loan ($26,866,210.66) reported in Dr. Lucy Corkin’s book ("UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA”), which is based on extensive fieldwork and interviews with Angolan Government officials. 4. 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 would be signing relevant agreements with the Government of Angola. Therefore, AidData has coded Sinosure as an accountable agency and as providing insurance for the loan. 5. 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. 6. AidData relies on the maturity, grace period, and interest rate that are recorded in the World Bank's Debt Reporting System (a 3.0899% interest rate, a 21.5 year maturity, and a 1.5 year grace period). See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 and https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0 and https://www.dropbox.com/s/0vpohwt96l40o19/World%20Bank%20DRS%20Extract%20Sep%202021%20--%20Chinese%20Loan%20Commitments%20from%202013%20to%202019.xlsx?dl=0 7. According to another World Bank source (https://documents1.worldbank.org/curated/pt/122781468002433388/pdf/397100v20ER0P01disclosed0Feb0602008.pdf), all borrowings under the MLFA carried a management fee (comissão de gestão) of 0.3%; a commitment fee (comissão de imobilização) of 0.3%, and an installation fee (comissão de instalação) of 1%.

Number of official sources

4

Number of total sources

6

Download the dataset

Details

Cofinanced

No

Direct receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

Government of Angola [Government Agency]

China National Cable Engineering Corporation [State-owned Company]

Insurance provider [Type]

China Export & Credit Insurance Corporation (Sinosure) [State-owned Company]

Collateral provider [Type]

Sociedade Nacional de Combustiveis de Angola (Sonangol) [State-owned Company]

Collateral

Sonangol provided a source of collateral 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. The volume of oil to be sold to UNIPEC each month for repayment of the loan varied according to market oil prices.

Loan Details

Maturity

22 years

Interest rate

3.0899%

Grace period

2 years

Grant element (OECD Grant-Equiv)

37.5616%

Bilateral loan

Export buyer's credit

Investment project loan

Pre-export financing or Commodity prepayment financing