Project ID: 450

[UMBRELLA - Sino-Congolese Programme] Chinese companies consortium and Eximbank provide $3 billion debt financing for infrastructure development in resource for infrastructure arrangement (see description for sub-projects)

Commitment amount

$ 3970710031.0

Constant 2017 USD

Not recommended for aggregates

This project is not recommended for use in creating aggregated sums. See the documentation for more information about this criteria.

Umbrella project

This project is classified as an "umbrella" project, and is connected to related projects.

Summary

Funding agency [Type]

China Railway Engineering Corporation (CRECG) [State-owned Company]; Export-Import Bank of China [State-owned Policy Bank]; SinoHydro [State-owned Company]

Recipient

Democratic Republic of the Congo

Sector

Other multisector (Code: 430)

Flow type

Loan

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

Implementation (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment year

2008

2015-01-01

Planned implementation start

Description

On September 17, 2007, a consortium consisting of China Eximbank, China Railways Construction Company (CREC), and Sinohydro and the Government of the Democratic Republic of Congo signed a “protocol d’accord” (or “项目换资源协议”). According to the terms of the agreement, CREC and Sinohydro would be granted a 68 percent stake in a new joint venture (JV) named the Sino–Congolais des Mines (Sicomines SARL), and a Congolese parastatal called Générale des Carrières et des Mine SARL (Gécamines SARL) would own the other 32 percent. [An April 2008 announcement by CREC that was published by Hong Kong Stock Exchange suggests that ownership of the Sicomines joint venture may have later be adjusted, such that CREC holds 43% ownership of the joint venture, Sinohydro holds 25%, Gécamines holds 20%, and a Mr. Gilbert Kalam Babanika (who was eventually appointed as deputy head of Sicomines) holds 12%. Then, on September 1, 2008, Zhejiang Huayou Cobalt joined the consortium of Chinese companies financing the project (and the company reportedly holds 1% ownership of the joint venture).] In exchange, the CREC and Sinohydro would provide the Government of the DRC with turnkey public infrastructure projects (worth $6.56 billion) financed by China Eximbank. The terms of lending were not identified in the “protocol d’accord”. Then, on April 22, 2008, a “convention de collaboration” (Chinese name: 关于刚果民主共和国矿业开发和基础设施建设的合作协议) was signed by the Government of the DRC and Sinohydro (on behalf of Sicomines). It specified that two tranches of infrastructure financing—reportedly worth $3 billion each—would be disbursed. These loans would carry the following terms: a 25-year maturity and an interest rate of 6-month LIBOR plus 100 basis points (or 3.839% at the time of the agreement). The proceeds from these loans would be disbursed to the Chinese contractors responsible for individual infrastructure projects. Project ID#450 provides a list of the infrastructure projects and subsidiary loans that have been approved to date. Additionally, as part of the April 22, 2008 “convention de collaboration”, it was reported that the Chinese company consortium were to provide 2.9 billion USD in loans to cover 1) 32 million USD loan to Gécamines to cover its initial capital injection to Sicomines (the total registered capital of Sicomines in 2008 was 100 million USD); 2) 50 million USD loan to Gécamines to procure supplies; and 3) to provide a shareholder loan for the development of the copper and cobalt mine at Kolwezi. The $2.9 billion was financed by a $870.1 million, interest-free shareholder loan (prêt d’actionnaire) from China Railway Engineering Corporation (CREC), Sinohydro Corporation and Zhejiang Huayou Cobalt, and a $2.0299 billion loan from China Eximbank at a fixed interest rate of 6.1%. Project ID#73204 captures the interest-free shareholder loan from China Railway Engineering Corporation (CREC), Sinohydro Corporation and Zhejiang Huayou Cobalt. Project ID#73145 captures the loan from China Eximbank. At the end of Fiscal Year 2013, Sino–Congolais des Mines (Sicomines SARL) disclosed that it had received loan disbursements worth $423,889,454. However, it did not disclose if these disbursements came from the China Eximbank loan, the interest-free shareholder loan (prêt d’actionnaire) from China Railway Engineering Corporation (CREC) and Sinohydro Corporation, or both loans. The Congolese government agreed to provide a sovereign guarantee for both the infrastructure loan and the $2.1 billion mining loan. Another unique feature of the April 22, 2008 agreement was the inclusion of a $350 million signing bonus from the consortium of Chinese firms. Then, following pressure from the IMF and civil society, an amendment (Avenant No. 3 à la Convention de Collaboration Relative au Developpement d’un Projet Minier et d’un Projet d’Infrastructures en République Démocratique du Congo du 22 Avril 2008) was made to the “convention de collaboration” in October 2009. It reduced size of the infrastructure loan from $6 billion to $3 billion and removed the sovereign guarantee for the mining loan. The sovereign guarantee for the infrastructure loan was left in place. China Eximbank was not a party to this amended agreement, which specified that if the floating (market) interest rate on the infrastructure loan (LIBOR plus 100 basis points) rose higher than the rate (4.4%) referenced in the April 22, 2008 “convention de collaboration”, an expanded consortium of Chinese firms (CREC, Sinohydro, and Zhejiang Huayou Cobalt Company Ltd) would assume responsibility for the additional interest payments. The profits from the investment by SICOMINES SARL in the copper and cobalt mine at Kolwezi would be used to repay the loans that finance the costs of developing the copper and cobalt mine and the unrelated infrastructure projects. However, nearly four years after the October 2009 amendment was signed, the Congolese parliament had still not ratified it and China Eximbank became concerned about the risk of non-repayment. In order to limit its risk exposure, China Eximbank suggested that it take over Gécamines’ 32 percent ownership stake and the Chinese consortium’s 68 percent ownership stake be mortgaged until the infrastructure and mining loans were repaid. The Congolese government rejected these proposed changes, and China Eximbank responded by rescinding its funding in early 2012. Then, the Chinese firms began negotiating with two alternative financiers: China Development Bank and the Bank of China. China Eximbank reversed its decision to halt funding of the infrastructure project in 2014. Its loan for the infrastructure project is now reportedly being implemented in two phases. The first phase of the loan was capped at $1.053 billion until the start of phase two, when the balance of the $3 billion loan will be made available for additional infrastructure projects. As of March 2017, 36 infrastructure projects worth $877 million had reportedly been approved through this line of credit. Timeline: A large number of subsidiary loans have been approved for infrastructure projects through this framework agreement. A report from the Office for Coordination and Monitoring of the Sino-Congolese Program (BCPSC) stated that in January 2009, MOFCOM authorized the disbursement of $518 million for the program. In 2012, an additional $370 million was disbursed. It was noted in the report that disbursements to the program were made before the completion of the feasibility study of the mining project, and $1.05 billion was expected to be disbursed before the mining project even goes into production. Agence Congolaise des Grands Travaux (ACGT) in 2017 reported that the total amount of commitments under the Sino-Congolese Program from 2008 to 2017 is 860,822,573.63 USD. Between 2008 to 2014, the total commitments were 610,822,573.63 USD, across a total of 12 projects. Between 2015 and 2017, 250 million USD was committed across 24 projects. As of 31st December 2017, 65% of the 250 million USD was drawn down. The 2018 ACGT report reported 3 projects that were financed by commitments made in 2018. In the listing of the sub-projects below, we have organized these projects into three time periods: 2008-2014, 2015-2017, and 2018. 2008-20141. Refurbishment of 5.3 km of Boulevard du 30 juin, Kinshasa. Status: completed. Cost: $24.1 million (#59427)2. Refurbishment of 2.5 km of Boulevard du 30 juin, Kinshasa. Status: completed. Cost: $19.3 million (#59429)3. 0.5km Central Station Loop Project, Kinshasa. Status: completed. Cost: $1.9 million (#85286)4. Refurbishment of 6.8 km of Avenue du Tourisme, Kinshasa. Status: completed. Cost: $24.4 million (#59431)5. Modernization of Boulevards Triomphale et Sendwe, Kinshasa. Status: completed. Cost: $29.2 million (#59654)6. Refurbishment of Lutendele road, Kinshasa. Status: completed. Cost: $21 million (#59437)7. Refurbishment of 66 km of Beni-Niania road, North Kivu. Status: completed. Cost: $57.8 million (#59439)8. Refurbishment of Esplanade of the People's Palace, Kinshasa. Status: completed. Cost: $25.2 million (#59430)9. Asphalting of national road between Lubumbashi and Kasomeno, Katanga province. Status: completed. Cost: $87.5 million (#59444)10. Grading of the national road between Lubumbashi and Kasomeno, Katanga province. Status: completed. Cost: $50.5 million (#59441)11. Factory to build prefabricated houses, Kisangani. Status: completed. Cost: $7.5 million (#59226)12. Construction of 50th anniversary hospital with 450 beds. Cost: $100 million (#59478)13. Construction of traversée ville de Butembo. Status: completed. Cost: $33,859,673.85 (#59198)14. Phase 1 of the Bukavu-Nyangezi-Kamanyola-Uvira Segment of Route Nationale 5 (RN5) Construction and Modernization Project. Status: completed. Cost: $13 million (#46231)15. Phase 2 of the Bukavu-Nyangezi-Kamanyola-Uvira Segment of Route Nationale 5 (RN5) Construction and Modernization Project. Status: implementation. Cost: $56.6 million (#85310)2015-20171. Refurbishment of Boulevards Triomphale et Sendwe, Kinshasa. Status: completed. Cost $5 million (#59432)2. Modernization of L'avenue Nzolana Phase 1. Cost: $15 million (#59229)3. Modernization of L'avenue Nzolana Phase 2. Cost: $23,986,953.49 (#59235)4. Rehabilitation of Kikwit-Idiofa Road (70km) [also known as Ingudi-Idiofa Road]. Cost: $10 million (#59227)5. Rehabilitation of Mbuji Mayi-Mwene Ditu Road. Status: Completion. Cost: $15 million (#59244)6. Rehabilitation and Modernization of Kolwezi Road. Status: Completed. Cost: $6 million. (#59205) 7. Modernization of the Kisangani Road. Status: Completed. Cost: $15 million. (#59216)8. Construction of Bunia Stadium. Status: Implementation. Cost: $10 million. (#59208)9. Construction of Goma stadium. Status: Implementation. Cost: $10 million (#59211)10. Rehabilitation of 100km Bunagana-Rutshuru-Goma Road. Status: Completed. Cost: $11 million. (#59210)11. Construction of Bukavu stadium. Status: Implementation. Cost $10 million. (#59212)12. Phase I of Uvira Road Rehabilitation and Modernization Project. Cost: $5 million (#46235)13. Phase II of Uvira Road Rehabilitation and Modernization Project. Cost: $5 million (#85285)14. Rehabilitation of Lwambo-Mitwaba-Manono-Kalemie Road Phase 1. Cost: $30 million (#59228)15. Rehabilitation of Lwambo-Mitwaba-Manono-Kalemie Road Phase 2. Cost: $284 million (#59245)16. Rehabilitation of road Kitanda-Ankoro (70km). Status: Commitment. Cost: $5 million (#59224)17. Rehabilitation of road Ankoro-Manono (115km). Status: Implementation. Cost: $5 million (#59243)18. Solar Street Light Acquisition and Installation Project. Status: Implementation. Cost: $10 million (#59217)19. Rehabilitation of the Kalemie Road (Phase I). Status: Implementation. Cost: $15 million (#59214)20. Rehabilitation of the Kalemie Road (Phase II). Status: Implementation. Cost: $26.8 (#85273)21. Phase 1 Construction of Kalemie Stadium. Status: Implementation. Cost: $10 million (#59213)22. Phase 2 Construction of Kalemie Stadium. Status: Commitment Cost: $6.1 million (#85274)23. Construction of Kalemie airport terminal. Status: Commitment. Cost: $5.5 million (#59220)24. Opening of road Kamina-Kabongo (230KM). Status: Implementation. Cost: $6 million (#59221)25. Opening of road Kabondo-Dianda-Mukwende (350KM). Status: Implementation. Cost: $6 million (#59222)26. Construction of metering and water treatment unit at Kamina. Status: Implementation. Cost: $10 million (#59209)27. Kabalo Bridge Construction and Modernization Project. Cost: $5.5 million (#73205)28. Modernization of Manono road network. Status: Implementation. Cost: $5 million (#59223)29. Construction of a ramp connecting Kalemie Stadium to Lumumba Boulevard. Status: Implementation. Cost: $5.5 million (#85311)30. Technical studies for Kalemie Road Rehabilitation and Modernization Project. Status: Implementation. (#59530)31. Technical studies for Bukavu Stadium Construction Project. Status: Implementation. (#59533)32. Technical studies for two bridges as part of the Kalemie Road Rehabilitation and Modernization Project. Status: Implementation. (#59527)33. Technical studies for Uvira Road Rehabilitation and Modernization Project. Status: Implementation (#59524)34. Technical studies for Goma Stadium rehabilitation. Status: Completion. (#59522)35. Construction of a bridge, health center, and vocational school in Sankuru Province. Status: Implementation. Cost: $5 million (#87580)2018TO BE ADDED IN 2018 UPDATE.Unknown:1. Rehabilitation of Komanda-Bunia-Mahagi Road. Status: pledge. Cost: $10 million (#59398)2. Rehabilitation and modernization of l'Avenue de Paix. Cost: Unknown (#59484)3. Donation of generators. Status: implementation. Cost: $6.5 million (#59443)4. Rehabilitation and construction of l'Avenue Ndjoku. Cost: Unknown (#59485)5. Kisangani International Airport Modernization Project. Status: pledge. Cost: Unknown (#59080)CSR Projects by Sicomines:Electric Power Public Welfare Project: #59721Water supply system of Kabada Town: #52974Power Supply Project to support Sicomines: #60065

Additional details

The French project title is Projet d'Infrastructures en République Démocratique du Congo (Sicomines). The Chinese project title is 以“项目换资源”模式投资开发铜钴矿资源项目及建设刚果(金)基础设施项目. The interest rate that applies to this loan (3.839%) was calculated by taking the average 6-month LIBOR rate during the month (April 2008) when the “convention de collaboration” was signed (2.839%) and adding a 1% margin. As Chinese companies are providing equity investment to the project, we assume that the Chinese Government has some degree of commercial/profit motive, and has coded the intent of the project as mixed.

Number of official sources

20

Number of unofficial sources

44

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Details

Cofinanced

Yes

Receiving agencies [Type]

Sino–Congolais des Mines (Sicomines SARL) [Joint Venture/Special Purpose Vehicle]

Implementing agencies [Type]

Gecamines [State-owned Company]

Accountable agencies [Type]

Loan type

Concessional

Maturity

25 years

Interest rate

3.839%

Grant element

37.35902998%

Gurarantee provided

Yes

Insurance provided

No

Collateralized/securitized

Yes

Collateral

Profits from the investment by SICOMINES SARL in the copper and cobalt mine at Kolwezi