ICBC contributes $1.239 billion to $4.1 billion syndicated buyer's credit loan for 2171 MW Caculo Cabaça Dam and Transmission Line Project (Linked to Project ID#52218, #67109, #67110, #67111)

On December 5, 2016, the Government of Angola entered into a $4.1 billion syndicated loan facility agreement with the Industrial and Commercial Bank of China (ICBC), China Eximbank, China Construction Bank, Bank of China, China Minsheng Bank, and Ping An Bank for the 2,171MW Caculo Cabaça Dam and Transmission Line Project. Project ID#67108 captures ICBC’s $1.239 billion contribution to the loan syndicate. Project ID#67109 captures China Eximbank’s $909 million contribution to the loan syndicate. Project ID#67110 captures Bank of China’s $619.8 million contribution to the loan syndicate. Project ID#67111 captures China Construction Bank’s $619.8 million contribution to the loan syndicate. The remaining contributions to the syndicated loan came from China Minsheng Bank ($371.88 million) and Ping An Bank ($371.88 million), both of which are privately-owned Chinese banks. The loan carries a term (maturity) of up to 15 years and an interest rate of LIBOR plus a 3.6% margin. As a credit enhancement, the borrower purchased a buyer’s credit insurance policy from China Export & Credit Insurance Corporation (Sinosure). The proceeds of this loan were to be used by the borrower to finance up to 85% of the cost of a $4,532,114,041.00 commercial (EPC) contract that it signed with CGGC-Niara — a joint venture of China Gezhouba Group Corporation (60% stake), Boreal Investments Limited (37.5% stake), and NIARA Holding (2.5% stake) — signed on June 11, 2015. As of December 31, 2021, the $4.1 billion syndicated loan had achieved a 100% disbursement rate. The project involves the construction of 2171 MW Caculo Cabaça Hydroelectric Power Station, which is located at the village of São Pedro da Quilemba, near the city of Dondo, in Cuanza Norte Province. This location is approximately 195 kilometers (121 mi), by road, southeast of Luanda, the capital and largest city of Angola. The project has three main components: temporary river diversion works, main construction works, and the supply of electromechanical equipment. The main dam will be 103 meters (338 ft) in height, with crest width of 553 meters (1,814 ft), creating a reservoir lake that measures 16.3 kilometers (10 mi) in length, with a surface area of 16.6 square kilometers (6 sq mi). Upon completion, the power plant is projected to generate an average of 8,566 gigawatt-hours of electricity a year, reducing greenhouse gas emissions by approximately 7.2 million tons annually. An official inauguration ceremony marking the beginning of construction was held on August 4, 2017. Construction was originally expected to last 80 months, so project completion was scheduled for April 2024. However, the project subsequently encountered various delays and problems. In September 2017, a corruption investigation by Der Spiegel, the Portuguese newspaper Expresso, and European Investigative Collaborations, an independent journalism centre, revealed that the daughter of President José Eduardo dos Santos, billionaire businesswoman Isabel dos Santos, is the beneficial owner of Boreal Investments Limited (a shell company that was registered in Hong Kong in 2012). Then, on November 5, 2019, the President of Angola formally authorized Presidential Order No. 79/18 (from July 12, 2019) which amended the EPC contract for the 171 MW Caculo Cabaça Dam and Transmission Line Project by removing CGGC-Niara and Boreal Investments Limited so that ‘the only party to the contract is China Gezhouba Group Company Limited (CGGC)’. Then, in May 2022, there was a major labor disturbance at the project site. Protestors ransacked the management offices at the project site and the police shot three workers. The workers were reportedly angry over low wages and poor treatment by their employer (CGGC). As of June 2020, 90% of tunneling work necessary to divert the Cuanza River to the dam had been completed and 3.47% of work on the dam itself had been completed. Then, on May 20, 2023, a ceremony was held to mark the temporary diversion of the Cuanza River, which marked the beginning of the main construction phase of the hydroelectric power project. At that time, the project employed more than 2,500 workers, of whom more than 81 percent were local, and the connection of the first generator to the power grid was scheduled for completion by 2026.

Additional details

1. Umbrella Project ID#52218 is the records the overall $4.1 billion buyer's credit loan (BCL). 2. The Chinese project title is 凯古路·凯巴萨水电站 or 安哥拉凯凯水电站. The Portuguese project title is Barragem de Caculo Cabaça. 3. The interest rate was calculated as follows: 1.306% (Average USD LIBOR 6-month rate in Dec. 2016) + 3.6% (given by IJ Global) = 4.906%. 4. The original EPC contract for this project (prior to its amendment) can be accessed in its entirety via https://www.dropbox.com/s/vdpm3xduvemt7hq/Caculo-Cabaca-Agreement.pdf?dl=0. 5. In November 2021, a banking syndicate consisting of Commerzbank and UniCredit agreed to provide a loan worth $1.06 billion for the construction of Caculo Cabaça hydroelectric power plant. It is unclear if this additional loan was intended to cover cost overruns. This issue warrants further investigation.

Number of official sources

12

Number of total sources

25