CDB provides $675 million loan (tranche A) to Ecuador’s Ministry of Finance and Economy for eligible projects (Linked to Project ID#59015, #96373, #96375)

On December 20, 2018, the Government of Ecuador’s Ministry of Finance and Economy and China Development Bank (CDB) entered into a $900 million facility (loan) agreement consisting of two tranches. Tranche A, which is captured via Project ID#59014, is a $675 million loan tranche that can be used by the borrower for ‘eligible projects.’ Tranche B, which is captured via Project ID#59015, is an RMB 1.53 billion ($236,782,800) loan that can be used by the borrower for ‘eligible projects’ involving approved contractors. Tranche A originally carried the following borrowing terms: a 6.6% interest rate, a 6-year maturity, and a 2-year grace period. Tranche B originally carried the following borrowing terms: a 6.2% interest rate, a 6-year maturity, and a 2-year grace period. Tranche A and Tranche B were originally scheduled for equal, quarterly repayments. Both tranches were to be repaid with and secured by (collateralized against) the proceeds from Petroecuador oil sales (deposited in a bank account that is accessible to the lender). More specifically, the proceeds from the sale of oil were to be paid into a Proceeds Account, which was opened by Petroecuador with CDB. Petroecuador was required to maintain a minimum cash balance in its Proceeds Account with CDB. The proceeds from oil sales to PetroChina and Unipec are also to be paid into a separate Proceeds Account, which was opened by Central Bank of Ecuador (BCE) with CDB. BCE was required to maintain a minimum cash balance in its Proceeds Account with CDB. As of May 2020, Tranche A had fully disbursed and Tranche B had disbursed RMB 206 million. The borrower made principal repayments under Tranche A worth $42,187,5000 on March 12, 2021, $42,187,5000 on June 12, 2021, $42,187,5000 on September 12, 2021, $42,187,5000 on December 12, 2021, $42,187,5000 on March 12, 2022, and $42,187,5000 on June 12, 2022. The borrower made principal repayments under Tranche B worth RMB 95,625,000 on March 12, 2021, RMB 95,625,000 on June 12, 2021, RMB 95,625,000 on September 12, 2021, RMB 95,625,000 on December 12, 2021, RMB 95,625,000 on March 12, 2022, and RMB 95,625,000 on June 12, 2022. The (principal) outstanding amount under Tranche A was $506,250,000.00 as of December 31, 2021 and $402,695,000.00 as of November 30, 2022. The (principal) outstanding amount under Tranche B was $180,536,175 as of December 31, 2021 and $128,703,390 as of November 30, 2022. The $900 million CDB loan has underperformed vis-a-vis the lender’s original expectations. Under the terms of a September 2022 debt rescheduling (captured via Project ID#96373 and Project ID#96375), the lender and borrower agreed to 3-year maturity extensions and interest rate reductions for Tranches A and B. More specifically, the parties agreed to reduce the interest rate that applies to Tranche A from 6.6% to 6.3%, reduce the interest rate that applies to Tranche B from 6.2% to 5.9%, and extend the final maturity dates of Tranches A and B from December 12, 2024 to December 12, 2027. Under the terms of the rescheduling agreement, the borrower is responsible for making 22 quarterly principal repayments under Tranche A worth $19,180,000 between September 12, 2022 and December 12, 2027 and 22 quarterly principal repayments under Tranche B worth RMB 43,460,000 between September 12, 2022 and December 12, 2027. The parties to the rescheduling agreement also agreed that the minimum cash balance in the CDB Proceeds Account would be $92,500,000 from December 12, 2020 until December 12, 2021, $88,000,000 from December 12, 2021 until September 9, 2022, $46,000,000 from September 9, 2022 until December 12, 2022, $45,000,000 from December 12, 2022 until December 12, 2023, $43,000,000 from December 12, 2023 until December 12, 2024, $41,000,000 from December 12, 2024 until December 12, 2025, $38,000,000 from December 12, 2025 until December 12, 2026, and $36,000,000 from December 12, 2026 until December 12, 2027 (the loan’s revised final maturity date). Additionally, the parties agreed that, irrespective of the amount outstanding under the December 20, 2018 CDB facility agreement, PetroEcuador would purchase 34,920,000 barrels of crude oil from PetroChina International and 13,320,000 barrels of crude oil from Unipec according to a revised delivery schedule.

Additional details

1. The CDB disbursement account number for Tranche A is NRAW 37108400000039390000). The CDB disbursement account number for Tranche B is NRAW 37101560031677120000. The CDB debt service payment account number is NRAW 37108400000039390000. The Petroecuador income (proceeds) account number is NRAW 37108400000031070000. 2. Each subsidiary loan under the CDB loan facility agreement is to be repaid in 16 installments, each payable every three months. 3. PetroEcuador, the Central Bank of Ecuador, and CDB signed a Phase V Account Management Agreement on December 20, 2018, which specifies the minimum cash balance that must be maintained in the CDB Proceeds Account. The Phase V Account Management Agreement, which is governed by PRC law, was amended on September 9, 2022. 4. The September 9, 2022 version of the Phase V Multiparty Agreement between Ecuador's Ministry of Economy and Finance, PetroEcuador, PetroChina International Company Limited, Unipec Asia Co., Ltd., and China Development Bank can be accessed in its entirety via https://www.dropbox.com/s/noz8pzsu34em35z/9%20September%202022%20Amendment%20to%2027%20December%202018%20Phase%20V%20Multi-Party%20Agreement.pdf?dl=0. 5. The September 9, 2022 loan rescheduling agreement can be accessed in its entirety via https://www.dropbox.com/s/alcgoop6e7yot47/9%20September%202022%20Amendment%20Agreement%20to%20the%2012%20December%202018%20Phase%20V%20Facility%20Agreement.pdf?dl=0. 6. The revised oil delivery schedule in Annex 1 and Annex 2 of the September 9, 2022 version of the Phase V Multiparty Agreement between Ecuador's Ministry of Economy and Finance, PetroEcuador, PetroChina International Company Limited, Unipec Asia Co., Ltd., and China Development Bank. 7. The individual projects that were supported by Tranche A and Tranche B are unknown. 8. The Ecuadorian Ministry of Finance loan identification number for Tranche A is 23197000. The Ecuadorian Ministry of Finance loan identification number for Tranche B is 23197001.

Number of official sources

9

Number of total sources

19