China Eximbank provides $9 million buyer’s credit loan for Luanda and Benguela Secondary School Construction and Equipping Project (Linked to Record ID#34030, #34775)

China Eximbank provides $9 million buyer’s credit loan for Luanda and Benguela Secondary School Construction and Equipping 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.

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 March 2005, China Eximbank and the Government of Angola signed a $16,163,641.55 subsidiary buyer’s credit loan agreement under the 2004 MLFA for the Luanda and Benguela Secondary School Construction and Equipping Project (as captured via Record ID#34775).

The proceeds of the loan were used to partially finance a $17,959,601.79 commercial contract with China Machinery Engineering Corporation (CMEC), which was signed on March 10, 2005.

Then, on July 19, 2007, China Eximbank entered into another $500 million 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.

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.

Then, on September 28, 2007, China Eximbank and the Government of Angola signed a $9,024,750 buyer’s credit loan agreement under the 2007 MLFA to support 'complementary actions' related to the Luanda and Benguela Secondary School Construction and Equipping Project. The proceeds of the subsidiary loan were used to partially finance a $10,027,500 commercial contract with Sinomach.

The purpose of the project was to construct and equip three secondary schools in the Viana [Sapú], Cacuaco and Nova Vida localities within Luanda Province, and construct and equip one secondary school in the Massangarala locality within Benguela Province. 15 Angola workers and 39 Chinese workers were employed through the project.

Sinomach was the contractor responsible for project implementation. The implementation of the project commenced on April 17, 2006 and reached completion on June 18, 2007.

The project was originally scheduled to commence on March 20, 2006 and various components of the project were originally scheduled for completion on April 30, 2007, July 12, 2007, and October 25, 2007.