China Eximbank provides $25.918 million buyer’s credit loan for construction of Quifangondo water treatment station, Caruaco water distribution center, and Luanda household water connections (linked to #34030)

On 28 September, 2007, China Eximbank and the Government of Angola signed a $25,918,537.82 buyer’s credit loan agreement for complementary actions related to the construction of a water treatment station in Quifangondo, a water distribution center in the municipality of Caruaco, and household water connections in the Province of Luanda (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 290). The project was financed through a $500 million master loan facility agreement (MLFA) that China Eximbank and the Government of Angola signed in September 2007 (see Project ID#34030). All subsidiary loans approved through this MLFA carried the same borrowing terms: an interest rate of 6.86% (3-month Libor + a 1.5% margin), a 22 year maturity, and a 5 year grace period.The proceeds of the subsidiary loan were used to partially finance a $28,798,375,35 commercial contract with China Machinery Engineering Corporation (CMEC) (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 290). This project reportedly entered implementation, but its precise implementation start and end dates are unknown.

Additional details

In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it identifies this loan as having a maturity length of 17 years; however, AidData records a maturity length of 22 years based on interview evidence that Dr. Ana Cristina Alves collected from Angola’s Ministry of Finance (see Project ID#34030).In July 2020, AidData asked Dr. Lucy Corkin, a leading expert on Chinese lending to Angola, whether the second, third, and fourth master loan facility agreements (MLFAs) that the Angolan Government signed with China Eximbank in 2007 and 2009 were structured as a buyer’s credit loans like the first MLFA that the Angolan Government signed with China Eximbank in 2004. Dr. Corkin noted that the second, third and fourth MLFAs were treated more like ceiling increases to the initial facility. Therefore, for the time being, AidData categorizes the second, third, and fourth MLFAs as buyer's credit loans. Sinosure is also assumed to be involved in this loan facility as the 2003 framework agreement (中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议) specified that Sinosure will be signing relevant agreements with the Government of Angola, although the nature of the agreements is unclear.AidData considers this loan to be collateralized in a de facto sense. The cash desposited by the Angolan Ministry of Finance into a bank account controlled by China Eximbank is, for all intents and purposes, a source of collateral. This is true even if the lender does not have a formal security interest in the account.

Number of official sources

2

Number of unofficial sources

4