Completed Mixed AidData Chinese Aid

China Eximbank provides $40 million buyer’s credit loan for Phase 2 of Luanda Electricity Network Rehabilitation and Expansion Project (Linked to Record ID#103, #42029, #34921, #34868)

$40.06M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Angola
Country	Angola
Start Date	Jul 01, 2004
End Date	Oct 18, 2027
Duration	8,509 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`34787`

Grant Description

China Eximbank provides $40 million buyer’s credit loan for Phase 2 of Luanda Electricity Network Rehabilitation and Expansion Project 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.

In July 2004, China Eximbank and the Government of Angola signed a $40,058,383.52 subsidiary buyer’s credit loan agreement under the MLFA for Phase 2 of the Luanda Electricity Network Rehabilitation and Expansion Project.

The proceeds of the loan were used to partially finance a $44,509,315.02 commercial (EPC) contract with China Machine Building International Corporation (CMIC), which was signed on July 5, 2004. The purpose of the project was to rehabilitate and expand electricity networks in Luanda Province. CMIC was the EPC contractor responsible for implementation.

The project was originally scheduled to begin implementation on June 5, 2005 and reach completion on October 30, 2007; however, it did not actually commence until February 25, 2005. It was ultimately completed in December 2006.

📋 Staff Comments

The Portuguese project title is Projecto de Reabilitação e Expansão da Rede Eléctrica de Luanda — Fase II. The Chinese project title is 罗安达输变电工程二期 or 罗安达市电网改造和扩建项目二期.
Phase I of the Luanda Electricity Network Rehabilitation and Expansion Project is captured via Project ID#103. Phase III of the Luanda Electricity Network Rehabilitation and Expansion Project is captured via Project ID#34921. Phase IV of the Luanda Electricity Network Rehabilitation Project is captured via Project ID#34868.
China Eximbank provided an additional buyer's credit loan for complementary actions for Phase II of the Luanda Electricity Network Rehabilitation and Expansion Project (as captured via Project ID#34826).
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. Therefore, AidData has coded Sinosure as an accountable agency and as providing insurance for the loan.
AidData considers this loan to be collateralized in a de facto sense. The cash deposited 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.
AidData relies on the maturity, grace period, and interest rate that are recorded in the World Bank's Debt Reporting System (a 3.0899% interest rate, a 21.5-year maturity, and a 1.5-year grace period). See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 and https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0 and https://www.dropbox.com/s/0vpohwt96l40o19/World%20Bank%20DRS%20Extract%20Sep%202021%20--%20Chinese%20Loan%20Commitments%20from%202013%20to%202019.xlsx?dl=07. According to another World Bank source (https://documents1.worldbank.org/curated/pt/122781468002433388/pdf/397100v20ER0P01disclosed0Feb0602008.pdf), all borrowings under the MLFA carried a management fee (comissão de gestão) of 0.3%; a commitment fee (comissão de imobilização) of 0.3%, and an installation fee (comissão de instalação) of 1%.

📚 Sources & References

Uncovering African Agency: Angola’s Management of China’s Credit Lines
CMIC: A Trusted Partner in Africa - China Machine-Building International Corporation Introduction
CMIC签订安哥拉罗安达电网改造二期工程合同
中国安哥拉电力合作项目举行通电仪式
公司签定安哥拉罗安达电网改造二期工程合同 (Company Signs Contract with Luanda
Angola for Two Power Grids Project)
SADC and Angola
中安石油、信贷和经贸一揽子合作计划开始进入实施阶段
Light failures in Luanda are due to the low levels received by EDEL
Building Bridges: China's Growing Role as Infrastructure Financier for Sub-Saharan Africa
Chinese Loans to Africa Database
UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA
LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS
LINHA DE CRÉDITO COM O EXIM BANK DA CHINA RELATÓRIO DAS ACTIVIDADES DESENVOLVIDAS II TRIMESTRE DE 2007
LINHA DE CRÉDITO COM O EXIMBANK DA CHINA PROJECTOS CONCLUÍDOS Dezembro, 2007
中国与安哥拉经济合作特点探析 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.