Project ID: 66

China Eximbank provides $50.5 million buyer’s credit loan for 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation Project (linked to #34030, #34853)

Commitment amount

$ 79169209.72

Constant 2017 USD

Summary

Funding agency [Type]

Export-Import Bank of China [State-owned Policy Bank]

Recipient

Angola

Sector

Transport and storage (Code: 210)

Flow type

Export Buyer's Credit

Concessional

No

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

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Implementation

2005

2005-12-13

Planned start

2005-12-13

Actual start

Commitment year

2007

Completion

2008

2008-06-30

Planned

2008-08-30

Actual

NOTE: This project began implementation and then later secured financing from a Chinese funding agency to continue project implementation

Description

On 2 March, 2004, China Eximbank and the Government of Angola signed a $2 billion Master Loan Facility Agreement (MLFA). All of the subsidiary buyer’s credit loans approved through this MLFA carried the following terms: an interest rate of 3-month LIBOR plus a 1.5% margin (or 2.612% at the time that the MLFA was signed), a 22 year maturity period, and 5 year grace period (see Project ID#42029). Then, in February 2005, China Eximbank and the Government of Angola signed a $190,515,690.59 subsidiary buyer’s credit loan agreement for the 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation Project (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 282). The proceeds of this loan were used to partially finance a $211,684,100.65 commercial contract with China Road and Bridge Corporation (CRBC), which was signed on 8 February, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 282 and The China Central Mainstream Media Press Corps Visits CRBC Angola Office).This project also received a supplementary $50,702,850.00 loan from China Eximbank through a $500 million credit line (see Project ID#34030) extended to the Government of Angola on 19 July, 2007. This subsidiary loan carried the following terms: 6.86% interest rate, 5 year grace period, and 22 year maturity. The proceeds of the loan were used to partially finance a supplementary commercial contract with CRBC worth $56,336,500.00 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 291). Project ID#34853 captures the first loan, and the second, supplementary loan is captured in this project.The purpose of this project, which employed 1336 Angolan workers and 367 Chinese workers, was the rehabilitation of a 357 km highway between Quifangondo and Negage via Caxito and Uige. The starting point of the road is in the town of Kifangondo, a northern suburb of Luanda City. It extends northward through the city of Caxito, the capital of Bengo Province and the city of Uige, the capital of Uige Province. The road terminates in the city of Negage, an important agricultural town within Uige Province.The contract supporting the project went into effect on 13 December, 2005; and the estimated project handover date was 30 June, 2008. The project officially commenced on 13 December, 2005 and a project handover ceremony took place on 30 August, 2008 (See: 中安经贸一揽子合作公路修复项目). The project was later inspected on 8 March, 2014 by MOFCOM (ECCO) officials (See: 驻安哥拉使馆经商处视察中国路桥承建的罗安达-威热公路).

Additional details

This project is also known as the 371 km Kifangondo-Caxito-Uige-Negage Highway Rehabilitation Project or the 221 Road Project. The Chinese project title is 安哥拉吉方刚多-卡西托-威热-加吉道路修复项目 or 基凡冈都 --卡希托 -- 威热 -- 内加热公路.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

6

Number of unofficial sources

5

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

China Road & Bridge Corporation (CRBC) [State-owned Company]

Accountable agencies [Type]

Loan type

Non-Concessional

Maturity

22 years

Interest rate

6.86%

Grace period

5 years

Management fee

0.3

Grant element

20.53162093%

Gurarantee provided

No

Insurance provided

Yes

Collateralized/securitized

Yes

Collateral

Sonangol provided a source of collateral for the loan, and repayment is to be done with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which are to be deposited in the Angolan Ministry of Finances (MINFIN) account at China Eximbank (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148). The volume of oil to be sold to UNIPEC each month for repayment of the loan, varies according to market oil prices. Under the agreement, 70% of works have to be contracted with Chinese companies and the same proportion of construction material, equipment and labour has to be contracted in China (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 149).