CPFHK provides $840 million loan for Benin Section of Niger-Benin Oil Pipeline Construction Project (Linked to Project ID#58435)

On January 23, 2019, the State of Niger and the Republic of Benin signed a bilateral agreement on the Niger-Benin Oil Pipeline Construction Project. Then, on August 5, 2019, the Republic of Benin entrusted the financing, construction, and operation of the Benin section of the Niger-Benin Oil Pipeline to a special purpose vehicle known as the West African Oil Pipeline (Bénin) Company S.A. [WAPCO Bénin or 西非原油管道（贝宁）股份有限公司 in Chinese]. The total cost of the Benin Section of the Niger-Benin Oil Pipeline Construction Project is $1.05 billion (CFAF 608 billion) and it is being financed according to a debt-to-equity ratio of 80:20. CNPC Finance (HK) Limited (CPFHK) — a subsidiary of the China National Petroleum Corporation (CNPC) — issued a loan worth an estimated $840 million to WAPCO Bénin for the Benin Section of the Niger-Benin Oil Pipeline Construction Project. The loan’s estimated interest rate is 8.05%. The other borrowing terms of the loan are unknown. The purpose of the project is to construct the 675 km Benin section of the 1,980 km Niger-Benin Oil Pipeline, which connects Niger's Agadem Rift Basin to the Port of Sèmè export terminal in the town of Sèmè-Kpodji. The Benin section of the pipeline consists of a 660 km overland subsection and a 15 km underwater subsection. The project scope also includes the construction of two pumping stations — one in Gogounou and the other in Tchatchou. Upon completion, the pipeline is expected to have a capacity of 90,000 barrels per day (bpd). The Government of Benin expects to receive $884.6 million in transit fees during the pipeline’s period of operation and $109 million in tax revenues (VAT and other fees and taxes). The construction of the pipeline is also expected to generate additional traffic to the Port of Cotonou in Benin. The port is expected to process up to 300,000 tons of goods once the pipeline becomes operational. China Petroleum Planning and Engineering Institute (CPPEI) and the China Petroleum Pipeline Engineering (CPPE) are the contractors responsible for project implementation. The project was originally scheduled to commence on March 15, 2020. However, due to the Covid-19 pandemic, construction did not begin until May 20, 2021. The pipeline was originally scheduled for completion in January 2022. On October 14, 2022, Chinese state-owned broadcaster CGTN referred to the Niger-Benin Oil Pipeline Construction Project as ‘an integral part of China’s Belt and Road Initiative.’ The Niger section of the project had achieved a 30% completion rate as of October 2022 (see Project ID#58435).

Additional details

1. The CNPC Finance (HK) Limited loan is not captured in the Chinese Loans to Africa Database developed by SAIS-CARI and maintained by the Global Development Policy Center at Boston University. 2. The face value of the CNPC Finance (HK) Limited loan is unknown. However, given that the total cost of the Benin Section of the Niger-Benin Oil Pipeline Construction Project is $1.05 billion and CNPC Finance (HK) Limited agreed to finance 80% of the project cost with debt, AidData assumes that the face value of the CNPC Finance (HK) Limited loan was roughly equivalent to $840 million. This issue warrants further investigation. Further research is also needed to determine if the CNPC Finance (HK) Limited was supported by any credit enhancements. 3. The French project title is Projet Pipeline d'Export Niger-Bénin or Projet de Pipeline d'Exportation Niger-Bénin. The Chinese project title is 西非跨国输油管道项目 or 尼日尔―贝宁油管项目 or 尼日尔-贝宁原油外输管道工程 or 阿加德姆二期油田及外输管道建设项目. 4. Africa Energy Intelligence identifies CNPC Finance (HK) Limited as the lender. 5. A feasibility study for the Niger-Benin Oil Pipeline Construction Project — undertaken by the China Petroleum Planning and Engineering Institute (CPPEI) and the China Petroleum Pipeline Engineering (CPPE) — recommended that CPFHK lend at an interest rate between 7.9% and 8.2%. As such, AidData has estimated the loan’s interest rate by taking the midpoint of this range (8.05%). 6. The precise financial commitment (loan signing) date is unknown. For the time being, AidData assumes a commitment year of 2020 since this was the first year of project implementation. 7. WAPCO Bénin is a subsidiary of the China National Oil and Gas Exploration and Development Co. (CNODC), which is itself a subsidiary of the China National Petroleum Corporation (CNPC). 8. The January 23, 2019 bilateral agreement between the Government of Niger and the Government of Benin on the Niger-Benin Oil Pipeline Construction Project can be accessed in its entirety via https://www.dropbox.com/s/2jdcbk00xhwynim/Accord%20Bilat%C3%A9ral%20Niger-B%C3%A9nin.pdf?dl=0.

Number of official sources

23

Number of total sources

51