Overview

[China-Venezuela Joint Fund] CDB funds USD 93 million for new transmission substations (linked to Record ID#58677, 94080, 94082, and 94084)

Commitment Year•2014Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•EnergyFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date: Mar 31, 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)

Receiving agencies

State-owned Banks

Banco de Desarrollo Económico y Social de Venezuela (BANDES)

State-owned Funds

China-Venezuela Joint Fund

Implementing agencies

State-owned companies

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] CDB funds USD 93 million for new transmission substations

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

On March 31, 2014, the Venezuelan government approved the use of USD 375 million from the China-Venezuela Joint Fund (see Record ID#58377) for four projects to improve of the national electricity system (Spanish: Sistema Eléctrico Nacional (SEN)). This project involved creating new transmission lines and substations. It's unclear when it was started, or if it was ever finished, but funds were allocated for it. The other projects for which the USD 375 million was allocated were USD 100 million for the National Public Lighting Plan (see Record ID#94080), USD 80 million for the Plan to Eliminate Illegal Taps (see Record ID#94082), and USD 100 million for the acquisition of special units for the electrical system (see Record ID#94804).

Staff comments

1. No transaction amount is recorded for this project because it is captured in Record ID#58677. 2. This project and its linked records were committed relatively late in the China-Venezuela Joint Fund. It is unclear which tranche the funding came from, but it is most likely from Tranche C (see Record ID#38316), which financed other electricity projects.