China Eximbank provides buyer’s credit loan for GECOMSA Telecommunications Project (Linked to Record ID#484)

China Eximbank provides buyer’s credit loan for GECOMSA Telecommunications Project On November 16, 2006, China Eximbank and the Government of Equatorial Guinea signed a $2 billion buyer’s credit facility agreement (互惠贷款) for various infrastructure projects.

The subsidiary buyer's credit loans under the $2 billion facility were secured with (i.e. collateralized against) minimum cash balances in an escrow account opened by Government of Equatorial Guinea in China Eximbank.

Under the original terms of an Account Settlement and Financing Agreement (Convenio de Liquidacion de cuentas y Financiamiento) that the parties signed on February 17, 2006, the minimum cash balance requirement was reportedly equivalent to 30 percent of the Government of Equatorial Guinea's outstanding stock of debt to China Eximbank.

After the Account Settlement and Financing Agreement was amended on March 26, 2010, the borrower was expected -- at any given point in time -- to maintain a minimum cash balance in the escrow account (also known as 赤道几内亚共和国财务预算部) equivalent to the value of its next set of semi-annual principal, interest, and fee payment obligations to the lender.

The borrower was also expected to deposit the cash proceeds from its oil export sales (crude oil sales revenue) to China into a payment reserve account (also known as 还款准备金 or 赤道几内亚共和国财务预算部还款准备金).

More specifically, the borrower was expected to deposit the cash proceeds from six oil cargoes into the payment reserve account.

In 2012, China Eximbank and the Government of Equatorial Guinea signed a subsidiary buyer’s credit loan agreement for the GECOMSA Telecommunications Project. The face value of the loan is unknown.

The purpose of the project was to establish a telecoms joint venture called Guinea Ecuatorial Comunicaciones Sociedad Anónima (GECOMSA). In January 2012, GECOMSA was launched, becoming the third telecommunications operator in Equatorial Guinea.

During the presentation of this company, the director Maria del Mar Bindang Eneme, reported that 51% of the shares in GECOMSA are held by the Government of Equatorial Guinea and 49% are held by ZTE Corporation.

GECOMSA was created to overcome the shortcomings that are occurring in the telecommunications sector and is the third communication company in Equatorial Guinea.

The inauguration ceremony for GECOMSA was attended by, among others, the Minister of National Security, Nicolas Obama Nchama, the Minister of Internal Affairs and Local Corporations, Clemente Engonga Nguema Onguene, and the Chinese Ambassador to Equatorial Guinea, Wang Shixiong. GECOMSA officially opened on February 1, 2012.

By September 2016, GECOMSA was teetering on the edge of bankruptcy and facing serious allegations of corruption and embezzlement.

One allegation is that the Minister of Security, Nicolas Obama Nchama, repeatedly solicited bribes from ZTE Corporation.

By September 2020, GECOMSA had accumulated salary arrears, rental arrears, arrears to China Eximbank, arrears to GITGE Equatorial Guinea, and arrears to ORTEL; its outstanding debts were reportedly worth CFA 4 billion.