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Overview

[China-Venezuela Joint Fund] China loans USD 840 million for construction of Planta Centro Power Plant (linked to Record ID#58677, #37833, #37804, and #37808)

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

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Dec 23, 2010
Start (actual)
May 31, 2012
End (actual)
May 18, 2016

Geospatial footprint

Map overview

Visualizes the AidData-provided feature geometry for this project.

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China loans USD 840 million for construction of Planta Centro Power Plant. More detailed locational information can be found at: https://www.openstreetmap.org/way/704227276

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

Government Agencies

  • Bolivarian Militia of Venezuela

State-owned companies

  • China Machinery Engineering Corporation (CMEC)
  • CORPOELEC

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

[China-Venezuela Joint Fund] China loans USD 840 million for construction of Planta Centro Power Plant

Interest type•Unknown

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

In 2010, USD 5.4 billon from the China-Venezuela Joint Fund Long Term Facility (see Record ID#37804, and #37808) was allocated to constructing power plants (see Record ID#37833). On December 23, 2010, CMEC and Corpoelec signed a contract for the construction of 600 MW for the Planta Centro power plant (Spanish: Termoeléctrica Planta Centro, Chinese: 中央电厂). Construction began May 31, 2012. In March of 2015, CMEC organized a training in China for 30 Venezuelan technicians to learn how to run the plant. The handover ceremony occurred on May 18, 2016. CMEC was the implementing agency for Unit 6 of the plant. Units 1, 2, 3, 4, and 5 were built in 1978, 1982, 1982, and 2015, respectively. Unit 6 was the only unit constructed with this loan. The 600 MW steam generation unit built for this plant is one of the largest in South America. Despite the new unit, the plant was only producing at 12.8% capacity in 2016. There was a difference of USD 672 million between the advertised cost and the actual cost. This was an overcharge of 125%. A lawsuit in Andorra over bribes paid by Chinese contractors to Venezuelan ministers alleged that CMEC secured the contract with a USD 55 million bribe. By 2019, the plant was not producing at all. Efforts were being made to revive the plant beginning in 2019. The Bolivarian Militia was deployed to the plant for weeding and plant control, and to defend the plant against "saboteurs".

Staff comments

1. This project is linked to Record ID#58677, which represents the China-Venezuela Joint Fund, and Record ID#37833, which is an umbrella project representing power plants pledged as part of the long-term joint facility. It is unclear if the funding came from the USD or RMB facility, so no interest rate is recorded. 2. No transaction amount is included because the funding for this project is already detailed in #37833. 3. According to CMEC, the contract was signed on December 23, 2010, and construction started on May 31, 2012. According to Corpoelec, construction started in January 2013. According to the National Assembly, the contract was signed in 2013. AidData uses the dates from CMEC.