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Overview

[China-Venezuela Joint Fund] CDB provides loan of USD 200 million for Delta Amacuro Agriculture Development Project (linked to Record ID#37829, 37528, 58677)

Commitment Year•2010Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•Agriculture, Forestry, FishingFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
May 1, 2010
End (actual)
Feb 1, 2019
Last repayment (originally scheduled)
Apr 30, 2013

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

  • Venezuela Instituto Nacional de Desarrollo Rural (INDER)
  • Venezuela Ministry of People's Power for Agriculture and Land

State-owned companies

  • China CAMC Engineering Co., Ltd. (CAMCE)
  • Pétroleos de Venezuela S.A. (PDVSA)

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan description

China-Venezuela Joint Fund provides loan of USD 200 million for Delta Amacuro Agriculture Development Project

Grant element•7.2899%Interest rate (t₀)•4.257%Interest type•Fixed Interest RateMaturity•3 years

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

The Delta Amacuro Agriculture Development Project (Spanish: Proyecto Integral de Desarrollo Agrario Delta Orinoco, Chinese: 委内瑞拉奥里诺科三角洲农业综合发展项目) is a USD 200 million project funded by Tranche B of the China-Venezuela Joint Fund (see Record ID#37528). The project began in June of 2010 and a completion ceremony was held on February 1, 2019. The primary outside contractor was CAMCE. Other implementing agencies included a subsidiary of PDVSA called PDVSA Agrícola, the Ministry of People's Power for Agriculture and Land, and INDER. The project consisted of the building of 20 rice storage silos capable of holding 2,000 tons each, 90.5km of irrigation canals, 36km of roads, a 10 MW power station, 27km of transmission lines, an 80,000-chicken farm, a 270 square meter agricultural laboratory, and one water pump station. CAMCE also supplied 160 sets of agricultural equipment. The project also built a rice packing plant, a rice seed processing plant, and two bridges connecting the Coguina, Manamito and Guara islands. On January 22, 2019, INDER signed the final acceptance letter and sent it to CAMCE. The opening ceremony was held on February 1, 2019. A May 2019 Reuters Special Investigation titled "How a Chinese venture in Venezuela made millions while locals grew hungry" covered this project in detail. It asserted that CAMCE did not complete the work as specified, the rice packaging plants were never used, locally grown rice has failed to materialize, and the canals were never built. It also discusses multiple corruption allegations involved in this project and other CAMCE agriculture projects in Venezuela, which came to a head in a 2019 Andorran lawsuit (see Record ID#91283, 91324, 91257, 91086, and 91235 for other CAMCE projects involved in this lawsuit). The rice processing plant has operated below its capacity since it opened. In 2020, it produced 5,000 tons, a quarter of the original project goal.

Staff comments

1. It was previously assumed that all the agricultural projects captured by Record ID#37829 were funded by the long-term facility (see Record ID#37804, 37808). However, according to "Planta Procesadora de Arroz contribuirá con el desarrollo agroalimentario en Delta Amacuro", this project was funded by the Chinese loan announced in the Official Gazette Number 39.019. This loan is tranche B of the joint fund (see Record ID#37528) (see "Gaceta Official Numero 39.019").