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Overview

[China-Venezuela Joint Fund] Chinese financing for dredging the Rio Orinoco Canal [Linked to Record ID#37808 and #37804]

Commitment Year•2011Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Sep 5, 2011

Geospatial footprint

Map overview

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The Chinese Government financed the dredging of the Orinoco River between Ciudad Guayana (Bolívar) and the mouth of the Atlantic Ocean. More detailed locational information can be found at https://www.openstreetmap.org/relation/11046658#map=9/8.6448/-60.7874

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownershipAt least 25% Chinese ownership

Funding agencies

State-owned Policy Banks

  • China Development Bank (CDB)

Receiving agencies

State-owned Banks

  • Banco de Desarrollo Económico y Social de Venezuela (BANDES)

State-owned Funds

  • China-Venezuela Joint Fund

Implementing agencies

State-owned companies

  • China Communications Construction Co., Ltd. (CCCC)

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

[China-Venezuela Joint Fund] Chinese financing for dredging the Rio Orinoco Canal

Interest type•Unknown

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales (in quantities not less than 230,000 barrels per day) to China National United Oil Corporation (ChinaOil), which was deposited in a collection (escrow) account at China Development Bank (CDB). Banco de Desarrollo Económico y Social de Venezuela (BANDES) opened and maintained a USD-denominated collection (escrow) account with CDB into which all proceeds from oil export sales -- under an offtake agreement (petroleum sales and purchase contract) between PDVSA and ChinaOil -- were deposited for the purposes of (a) making regular debt service payments to CDB, and (b) maintaining a minimum cash collateral balance. The borrower was required to maintain a minimum cash balance in the collection (escrow) account equivalent to no less than 1.3 times the aggregate amount of principal, interest, and any other amount due during the next repayment period. If the minimum cash balance was not maintained, then PDVSA would be responsible for increasing the amount of fuel and/or crude oil to be delivered under the petroleum sales and purchase contract to ensure that (a) the actual debt service coverage ratio was maintained at the required level at the required times; and (b) the amount in the New Collection Account was sufficient to meet the required balance requirements set out in the facility agreement. If PDVSA did not do so, then BANDES was responsible for transferring funds to the CDB-controlled bank account to 'remedy any shortfall.' The lender also had the ability to block the debtor from withdrawing the funds.

Narrative

Full Description

Project narrative

The dredging project of the Orinoco river navigation channel, on the stretch between Ciudad Guayana (Bolívar) and the mouth of the Atlantic Ocean is financed through the long term facility of the China Venezuela Joint Fund (captured in #37808 and #37804) with an amount of 161.5 million USD. The dredging of the Orinoco navigation channel is a project approved in 2011as part of the plan for the recovery of the productive capacity and dispatch of state-owned iron ore and ferrosiderurgic products. The goal of the project is to return to the canal a level of depth similar to the one it had at the time of being put into service in the mid-20th century for the departure of ships loaded with iron ore, steel and other products made in the basic companies located in Ciudad Guayana , Bolivar state. This operating depth is 34 feet minimum in the inner section of the channel and 44 feet maximum in its outer section, which ensures the safety of vessels that use this channel throughout the year, regardless of the level of descent or increase of the river level due to the rains. The resources allocated to this project also include the acquisition of hydrographic vessels and buoy placement, as well as the installation along the canal of a new Navigation Aid System. The China-Venezuela Joint Fund receives contributions from China Development Bank and FONDEN, and it is administered by BANDES. See Record ID#58677 for more information on the fund.