China Eximbank provides $105.74 million buyer’s credit loan for Malabo Natural Gas Power Plant Construction Project (Linked to Record ID#484)

Project narrative

On November 16, 2006, China Eximbank and the Government of Equatorial Guinea signed a $2 billion buyer’s credit facility agreement (互惠贷款) for various infrastructure projects. All subsidiary loans approved under this buyer’s credit facility agreement carry the following terms: a 5.5% interest rate, a 5 year maturity, a 2 year grace period, a 0.375% commitment fee, and a 0.5% risk guarantee (garantia del riesgo) cost. The subsidiary buyer's credit loans under the $2 billion facility were secured with (i.e. collateralized against) minimum cash balances in an escrow account opened by Government of Equatorial Guinea in China Eximbank. Under the original terms of an Account Settlement and Financing Agreement (Convenio de Liquidacion de cuentas y Financiamiento) that the parties signed on February 17, 2006, the minimum cash balance requirement was reportedly equivalent to 30 percent of the Government of Equatorial Guinea's outstanding stock of debt to China Eximbank. After the Account Settlement and Financing Agreement was amended on March 26, 2010, the borrower was expected -- at any given point in time -- to maintain a minimum cash balance in the escrow account (also known as 赤道几内亚共和国财务预算部) equivalent to the value of its next set of semi-annual principal, interest, and fee payment obligations to the lender. The borrower was also expected to deposit the cash proceeds from its oil export sales (crude oil sales revenue) to China into a payment reserve account (also known as 还款准备金 or 赤道几内亚共和国财务预算部还款准备金). More specifically, the borrower was expected to deposit the cash proceeds from six oil cargoes into the payment reserve account. In 2010, China Eximbank and the Government of Equatorial Guinea signed a subsidiary buyer’s credit loan agreement for the Malabo Natural Gas Power Plant Construction Project. The proceeds of the loan were used by the borrower to finance a $124.4 million commercial contract with China Machinery Engineering Corporation (CMEC). The project involved the installation of three single cycle turbo-gas generators with a total installed capacity of 126MW at a power plant in the city of Malabo. CMEC was the EPC contractor responsible for implementation. Construction began in 2010 and it was completed in 2011. The power plant was successfully connected to the national grid on October 18, 2011. The project was subsequently inspected on May 1, 2012.