ICBC provides $366 million buyer’s credit for Mandisovi-Chico and La Paz-Estacas de Entre Ríos Irrigation Project

In mid-June 2013, the China State Construction Engineering Company expressed interest in investing in infrastructure works in the province of Entre Ríos. Then, on October 22, 2014, the Industrial and Commercial Bank of China (ICBC) and the Government of the Province of Entre Ríos signed a $366,000,000 buyer's credit loan agreement for the Mandisovi-Chico and La Paz-Estacas de Entre Ríos Irrigation Project. The agreement was signed by Mr. Gustavo Bordet, Governor of Entrios Rios Province, and Mr. Gailigo, Ambassador of Argentina to China. The loan was to be repaid over 10 years (in 20 installments every six months) after a 5 year grace period, with an interest rate of 6-month LIBOR plus a 4.5% margin and a 2% default (penalty) interest rate. The loan agreement also included a 1.5% management fee and a commitment fee of 1.45% per year on undisbursed funds. Sinosure provided insurance for 95% of the buyer’s credit loan, and the remaining 5% of the loan was guaranteed by China State Construction Engineering Corporation (CSCEC). The proceeds of the loan were to be used by the borrower to finance approximately 85% of the cost of a $390 million (RMB 2.68 billion) commercial contract with CSCEC, which was signed on July 18, 2014. The purpose of the project is to develop and construct two aqueducts: one Mandisovi to Chico and one from La Paz to Estacas de la Provincia Entre Ríos. More specifically, the project consists of an aqueduct from North Entrerriano to La Paz Estacas (Acueducto del Norte Entrerriano-La Paz Estacas) and the distribution of water for irrigation from Mandisovi to Chico (Sistematizacioón y Distribución de Agua Para Riego-Mandisoví Chico). The aqueducts are expected to provide 200,000 hectares of irrigation to the region and help increase agricultural productivity (specifically for citrus fruits, rice, and corn). The project has provoked three different types of objections: the direct issuance (without public bidding) of a contract to a Chinese company, potential environmental degradation, as well as excessive public debt. The M’biguá Foundation and Environmental Justice has also warned about a lack of transparency and information about the project. Additionally, an Entre Rios local organization brought an unconstitutionality action (with respect to the law No. 10.352) against the provincial government's authorization of the project. No further implementation status updates could be identified by AidData as of July 2023. CSCEC identifies the project on its website in a list of major ongoing projects being implemented by the company

Additional details

1. The loan agreement can be accessed in its entirety via https://www.dropbox.com/s/qf0vvpfa4iy4rh1/2015%20ICBC%20loan%20for%20the%20development%20and%20construction%20of%20irrigation%20projects%20.pdf?dl=0 and https://www.documentcloud.org/documents/20484884-arg_2015_459 2. The Spanish project title is Proyecto de riego Mandisovi-Chico y La Paz-Estacas de Entre Ríos. 3. The China-Latin America Commercial Loans Tracker, which is produced by the Inter-American Dialogue, does not capture the syndicated loan that supported this project. 4. The all-in interest rate recorded for the loan was calculated by adding 6-month LIBOR in October 2014 (0.324%) to 4.5%.

Number of official sources

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Number of total sources

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