China Eximbank provides $40.225 million for Luanda Water Supply System Rehabilitation Project (Linked to Record ID#42029)

China Eximbank provides $40.225 million for Luanda Water Supply System Rehabilitation 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 $40,225,877.10 buyer's credit loan agreement under the MLFA for the Luanda Water Supply System Rehabilitation Project.

The proceeds of this loan were used to partially finance a $44,695,419.00 commercial (EPC) contract with China Machinery Engineering Corporation (CMEC).

The project, which employed 150 Angolan workers and 153 Chinese workers, involved an ETA in Candelabro, a new water catchment in Quifangondo, the addition of intake pipes and the implementation of fountains in the municipalities of Viana and Cacuaco. CMEC was the EPC contractor responsible for project implementation.

The EPC contract supporting the project was originally scheduled to commenced on November 18, 2005 and the project had an originally scheduled handover date of October 2007.

The project was ultimately completed, according to Angola’s Ministry of Finance; however, it is unclear exactly when the project was completed.