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 #42029)

Commitment amount

$ 35559310.72

Constant 2017 USD

Summary

Funding agency [Type]

Export-Import Bank of China [State-owned Policy Bank]

Recipient

Angola

Sector

Energy (Code: 230)

Flow type

Export Buyer's Credit

Concessional

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 year

2008

Completion

2010

2010-01-01

Actual

Description

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 2008, China Eximbank and the Government of Angola signed a $26,866,210.66 subsidiary buyer’s credit loan agreement for Phase 2 of the Malanje Province Electricity Network (MT and BT) Rehabilitation and Expansion Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA). The proceeds of this loan were used to partially finance a $29,851,345.18 commercial contract with an unidentified firm (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA). 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.The contractor for the project is likely China National Cable Engineering Corporation.

Additional details

The Portuguese project title is Reabilitação e Expansão das redes MT e BT de Malange. The project is likely referred to as 卡库苏城市电网网改造项目 in Chinese. 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.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

2

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

China National Cable Engineering Corporation [State-owned Company]; Government of Angola [Government Agency]

Accountable agencies [Type]

Loan type

Concessional

Maturity

22 years

Interest rate

2.612%

Grace period

5 years

Management fee

0.3

Grant element

50.58856436%

Gurarantee provided

No

Insurance provided

Yes

Collateralized/securitized

Yes

Collateral

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).