Completed Mixed AidData Chinese Aid

China Eximbank extends $500 million master loan facility agreement for 'complementary actions' in July 2007 (Linked to Record ID#42029)

$500K USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Angola
Country	Angola
Start Date	Jul 19, 2007
End Date	Jul 22, 2033
Duration	9,500 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`34030`

Grant Description

China Eximbank extends $500 million master loan facility agreement for 'complementary actions' in July 2007 On November 28, 2003, the Chinese Government and the Angolan Government signed a framework agreement pertaining to a special economic cooperation arrangement (Agreement name in Chinese: 中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议).

Following the signing of the framework agreement, on March 2, 2004, China Eximbank entered into a $2 billion Master Loan Facility Agreement (MLFA) with the Government of Angola.

📋 Loan / Grant Terms

⏳ Grace Period1.5 years

The facility was split between a $1.0 billion Phase I facility and a $1.0 billion Phase II facility.

Availability of the Phase II facility was subject to confirmation by the lender on or prior to the date falling five years after satisfaction of the conditions precedent to the MLFA and was made available by China Eximbank during that period.

The MLFA is a framework agreement under which the Government of Angola and China Eximbank may conclude individual buyer’s credit loan agreements (ILAs or subsidiary loan agreements) for the purpose of financing up to 90% of the contract price owing to certain contractors in respect of certain contracts.

The first tranche of the facility was released in December 2004. The facility was fully drawn down as of December 31, 2017.

Sonangol provided a source of collateral under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (MINFIN) account at China Eximbank.

The volume of oil to be sold to UNIPEC each month for repayment of the loan varied according to market oil prices.

Under the agreement, 70% of works have to be contracted with Chinese companies and the same proportion of construction material, equipment and labour has to be contracted in China. Loan disbursements were made on a project-by-project basis.

Tendering, management and payments were jointly managed by the Chinese Ministry of Commerce and the Angolan Ministry of Finance (which coordinated the various Angolan line ministries responsible for supervising the projects).

The Angolan Ministry of Finance submitted the projects for tendering; China Eximbank selected Chinese candidate firms for the projects; and a joint commission made the final firm selections.

The process was managed by an office in the Angolan Ministry of Finance -- known as Gabinete de Apoio Técnico (GAT) -- that was specifically created to manage the MLFA with China Eximbank.

On July 19, 2007, China Eximbank entered into another $500 million Master Loan Facility Agreement (MLFA) with the Government of Angola (captured via Record ID#34030). The MLFA was meant to finance 'complementary actions' to the 2004 MLFA (captured via Record ID#42029).

The 2007 MLFA facility financed a total of 18 contracts, which supported projects originally undertaken through the 2004 MLFA.

📋 Loan / Grant Terms

⏳ Grace Period1.5 years

Sonangol provided a source of collateral under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (MINFIN) account at China Eximbank.

The volume of oil to be sold to UNIPEC each month for repayment of the loan varied according to market oil prices.

The following is a list of projects financed through the 2007 MLFA as of June 30, 2008: Record ID#34795, a $26.55 million loan for the Huambo and Bié Agricultural School Construction Project Record ID#34797, a $10.767 million loan for the Malanje Agricultural School Rehabilitation Project Record ID#34799, a $33.578 million loan for the Kwanza-Sul and Kwanza Norte Agricultural School Construction and Equipping Project Record ID#34800, a $26.564 million loan for the Luanda and Benguela Technical School Construction Project Record ID#34802, a $9,024,750 loan for the Luanda and Benguela Secondary School Construction and Equipping Project Record ID#34822, a $13.297 million loan for the Malanje Secondary School Construction Project and Huíla Polytechnic Institute and Secondary School Construction Project Record ID#34824, a $12.795 million for the Cabinda Technical Institute Construction and Equipping Project Record ID#34826, a $9.593 million loan for the SE PS05-Catete Road Expansion Project and Phase 2 of Luanda Electricity Grid Rehabilitation and Expansion Project Record ID#34827, a $20.613 million loan for the Caxito Electricity Network (MT, BT, and IP) Rehabilitation and Expansion and 60Kv Quifangondo-Cazenga Transmission Line Rehabilitation Project Record ID#34828, a $8.8 million loan for the Huambo Water Supply Network Expansion Project Record ID#65, a $25.918 million loan for the construction of Quifangondo water treatment station, Caruaco water distribution center, and Luanda household water connections Record ID#34829, a $4.865 million loan for water supply activities in Catete, Caxito, and Uige Record ID#34830, a $68.325 million loan for the Huambo, Malanje, Benguela, and Huila Regional Hospitals Project Record ID#34831, a $65.359 million loan for complementary actions for 7 municipal hospitals and 9 health centers Record ID#34832, a $9.787 million loan for complementary actions for the Caculama Municipal Hospital Construction and Equipping Project Record ID#66, a $50.7 million loan for the 357 km Quifangondo-Caxito-Uige-Negage Highway Rehabilitation Project Record ID#34833, a $36 million loan for the Refrigeration Truck and Isothermal Vehicle Acquisition Project Record ID#34834, a $53.5 million loan for the 418,750 Telecommunication Lines Construction Project There are some indications that the Government of Angola's borrowings under the July 2007 MLFA have financially underperformed vis-a-vis the original expectations of the lender.

As a result of the Government of Angola’s decision to avail itself of the G20's Debt Service Sustainability Initiative (DSSI), the MLFA and ILAs entered into by China Eximbank and the Government of Angola (described above) were under DSSI treatment and payments due by the Government of Angola under these finance agreements were suspended from May 1, 2020 until December 31, 2021.

📋 Staff Comments

AidData considers this loan to be collateralized in a de facto sense. The cash desposited by the Angolan Ministry of Finance into a bank account controlled by China Eximbank is, for all intents and purposes, a source of collateral. This is true even if the lender does not have a formal security interest in the account.
In July 2020, AidData asked Dr. Lucy Corkin, a leading expert on Chinese lending to Angola, whether the second, third, and fourth master loan facility agreements (MLFAs) that the Angolan Government signed with China Eximbank in 2007 and 2009 were structured as a buyer’s credit loans like the first MLFA that the Angolan Government signed with China Eximbank in 2004. Dr. Corkin noted that the second, third and fourth MLFAs were treated more like ceiling increases to the initial facility. Therefore, for the time being, AidData categorizes the second, third, and fourth MLFAs as buyer's credit loans. Sinosure is also assumed to be involved in this loan facility as the 2003 framework agreement (中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议) specified that Sinosure would be signing relevant agreements with the Government of Angola.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
This 2007 MLFA (credit line) is distinct from a $2 billion MLFA also extended by China Eximbank in September 2007 (as captured via Project ID#31742).

📚 Sources & References

Bartering Globalization: China’s Commodity- backed Finance in Africa and Latin America
Chinese Financial Assistance in Angola
China and Angola Strategic partnership or marriage of convenience?
Uncovering African Agency: Angola’s Management of China’s Credit Lines
Angola and China: A Pragmatic Partnership
Bartering Globalization: China’s Commoditybacked Finance in Africa and Latin America
中国贷款在安哥拉电力部门使用率最高
Chinese Loans to Africa Database
Eastern Promises: New Data On Chinese Loans in Africa, 2000 to 2014
THE REPUBLIC OF ANGOLA U.S.$500,000,000 9.375 per cent. Notes due 2048, 2015 Government of Angola Bond Prospectus
China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil
UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA
Obras e Projectos do Governo
LINHA DE CRÉDITO COM O EXIMBANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2008
China-Angola aid relations: strategic cooperation for development?
Angola Public Expenditure Review (In Two Volumes) Volume II: Sectoral Review
IDS_Average interest on new external debt commitments
IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments
World Bank DRS Extract Sep 2021 -- Chinese Loan Commitments from 2013 to 2019
Global Medium Term Note Programme Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.