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Overview

[China-Venezuela Joint Fund} China funds USD 1.045 Billion El Vigia (Don Luis Zambrano Thermoelectric) Power Plant (linked to Record ID#37833, 58677)

Commitment Year•2010Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•EnergyFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Sep 4, 2010
End (actual)
Jan 27, 2015

Geospatial footprint

Map overview

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China funds USD 1.045 Billion El Vigia (Don Luis Zambrano Thermoelectric) Power Plant. More detailed locational location can be found at: https://www.openstreetmap.org/way/948860707

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownershipAt least 25% Chinese ownership

Funding agencies

State-owned Policy Banks

  • China Development Bank (CDB)

Receiving agencies

State-owned Banks

  • Banco de Desarrollo Económico y Social de Venezuela (BANDES)

State-owned Funds

  • China-Venezuela Joint Fund

Implementing agencies

Private Sector

  • WorleyParsons Ltd. (USA)

State-owned companies

  • China CAMC Engineering Co., Ltd. (CAMCE)
  • China Energy Engineering Group Co., Ltd. (CEEC)
  • CORPOELEC

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan description

[China-Venezuela Joint Fund} China funds USD 1.045 Billion El Vigia (Don Luis Zambrano Thermoelectric) Power Plant

Interest rate (t₀)•1.72%Interest type•Fixed Interest Rate

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales (in quantities not less than 230,000 barrels per day) to China National United Oil Corporation (ChinaOil), which was deposited in a collection (escrow) account at China Development Bank (CDB). Banco de Desarrollo Económico y Social de Venezuela (BANDES) opened and maintained a USD-denominated collection (escrow) account with CDB into which all proceeds from oil export sales -- under an offtake agreement (petroleum sales and purchase contract) between PDVSA and ChinaOil -- were deposited for the purposes of (a) making regular debt service payments to CDB, and (b) maintaining a minimum cash collateral balance. The borrower was required to maintain a minimum cash balance in the collection (escrow) account equivalent to no less than 1.3 times the aggregate amount of principal, interest, and any other amount due during the next repayment period. If the minimum cash balance was not maintained, then PDVSA would be responsible for increasing the amount of fuel and/or crude oil to be delivered under the petroleum sales and purchase contract to ensure that (a) the actual debt service coverage ratio was maintained at the required level at the required times; and (b) the amount in the New Collection Account was sufficient to meet the required balance requirements set out in the facility agreement. If PDVSA did not do so, then BANDES was responsible for transferring funds to the CDB-controlled bank account to 'remedy any shortfall.' The lender also had the ability to block the debtor from withdrawing the funds.

Narrative

Full Description

Project narrative

On September 3, 2010, CAMCE signed the construction contract for the Don Luis Zambrano Thermoelectric power plant (Spanish: Planta Termoeléctrica Don Luis Zambrano or Termoeléctrica El Vigia, Chinese: 比西亚). It was part of an allocation of USD 5.5 billion from the China Venezuela Joint Fund to build power plants (see Record ID#37833). According to CAMCE, the original contract was worth USD 956 million. According to a 2018 National Assembly report, the original investment was USD 804 million. The cost eventually expanded to USD 1.045 billion. The first turbine was put into use on July 31, 2013. The second turbine was connect on November 25, 2013. The third turbine was connected on January 27, 2015. The project reached full load on July 10, 2015. By this point, the total government investment in the project had increased to USD 1.145 billion. The primary contractor was CAMC. China Energy Engineering Company (CEEC) and WorleyParsons also worked on the project. The project involved two 200 MW combined cycle Siemens turbines, and one 170 MW steam turbine. This project had a number of issues. The attorney for CAMC was called before a special commission of the National Assembly on May 4, 2016, to account for the massive cost overruns on this and other CAMC projects in Venezuela. The special commission also found that while costs had reached USD 1.145 billion, the value of the work done was only USD 317 million, a 60% markup. It was alleged in a 2019 lawsuit in Andorra that CAMC paid bribes worth EUR 31 million to secure the Don Zambrano contract. There was a fire on March 12, 2018 that destroyed turbines 1 and 3. By 2021, the plant was generating very little electricity despite promises from Maduro to improve its capacity to 450 MW and efforts to restore the second and third turbines.

Staff comments

1. This project is called "Termoeléctrica Don Luis Zambrano" or "Termoeléctrica de El Vigía" in Spanish and "比西亚" in Chinese. Vigia is the town the plant is located in. Most Venezuelan sources use the name "Zambrano" in reference to the project, whereas Chinese sources typically use "Vigia" or "比西亚". 2. This project is linked to Record ID#58677, the China-Venezuela Joint Fund, and Record ID#37833, an umbrella project capturing power plants funded by the China-Venezuela joint fund. 3. Because this project is funded by the joint fund, there is no transaction amount recorded.