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Overview

[China-Venezuela Joint Fund] Construction of 3rd Joint Satellite [Linked to Record ID#38316 and #58677]

Commitment Year•2013Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•CommunicationsFlow Type•Loan

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2013

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 Academy of Space Technology (CAST)
  • China Great Wall Industry Corporation

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

[China-Venezuela Joint Fund] Construction of 3rd Joint Satellite

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

A new communications satellite was authorized at the meeting between China and Venezuela in September of 2013. The meeting included 27 agreements in which the two countries committed additional financing of US$5bn to a joint fund for a range of projects, taking the total funds to US$40bn. The satellite, known as VRSS-2, was ordered on October 5th of 2014 and will be in operation by 2017. It is being designed and built in China. This project is partially funded by the $5 bln credit line secured by Maduro, also known as Tranche C of the China Venezuela Joint Fund (see Record ID#38316). 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.