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Overview

[China-Venezuela Joint Fund] CDB funds USD 657 million Ammonia, Urea, and Industrial Services Plants in Carabobo (linked to Record ID#58677)

Commitment Year•2008Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2008
End (planned)
Mar 31, 2013
End (actual)
Nov 19, 2014

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)

Cofinancing agencies

Government Agencies

  • Fondo Nacional para el Desarrollo Nacional (FONDEN)

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

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 Ministry of Energy and Mining

State-owned companies

  • Pequiven - La Corporación Petroquímica de Venezuela

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

[China-Venezuela Joint Fund] CDB funds USD 657 million Ammonia, Urea, and Industrial Services Plants in Carabobo

Interest type•Unknown

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales 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 2008, construction was started on plants to make ammonia and urea (Spanish: Planta Amoníaco y Urea) in the Morón Petrochemical Complex in Carabobo. At the same time, an Industrial Services plant (Spanish: Planta de Servicios Industriales) was also constructed in the same complex. The total project cost was USD 2,227,070,000 or VEF 361,122,222.22. USD 657 million came from the China-Venezuela Joint Fund (see Record ID#58677). USD 1.396 billion came from FONDEN, a Venezuelan state-owned fund. USD 349 million was financed by Petróleos de Venezuela (PDVSA), the Venezuelan state-owned oil company. Hugo Chavez announced that the plants would be completed in the first quarter of 2013, but the plants were inaugurated on November 19, 2014. The project was implemented by the Ministry of People's Power for Petroleum and Mining and the Venezuelan state-owned petrochemicals company PEQUIVEN. It has the capacity to produce 630,000 metric tons of ammonia and 770,000 metric tons of urea per year. This is far more than the Venezuelan market uses, so much of it is intended for export. Industrial services supports petrochemical production by providing the necessary water, steam, air, and natural gas. In 2019, the plant was not operating at full capacity because it had not received the necessary maintenance. Additionally, the nearby Riecito mines used to supply it with phosphate did not have sufficient reserves to provide for the plant at its full capacity. In 2020, the industrial services plant was failing, which prevented the full functioning of the El Palito refinery.

Staff comments

1. No transaction amount for this project is recorded because it is captured in Record ID#58677.