China Eximbank provides $429.71 million buyer’s credit loan for Caxito-Nzeto Highway Rehabilitation Project (Linked to Record ID#31742)

China Eximbank provides $429.71 million buyer’s credit loan for Caxito-Nzeto Highway 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 September 28, 2007, China Eximbank entered into a $2 billion Master Loan Facility Agreement (MLFA) with the Government of Angola.

The MLFA, which is an oil prepayment facility, was designed to finance 100 projects via individual loan agreements (ILAs). The MLFA 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 was a framework agreement under which the Government of Angola and China Eximbank could 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.

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 September 28, 2007, China Eximbank and the Government of Angola signed a $429,710,921.10 buyer’s credit loan agreement under the 2007 MLFA for the Caxito-Nzeto Highway Rehabilitation Project.

The proceeds of the subsidiary loan were used to partially finance $477,456,579 commercial contract with China Road and Bridge Corporation (CRBC), which was signed on May 17, 2007.

The purpose of the project was to rehabilitate a 208 km two-way dual-lane expressway that runs from the coastal city of Nzeto (N'Zeto) to the city of Caxito in Bengo Province. Angola National Roads Institute (INEA) was the project owner, and Gauff Engineering was the project supervisor. CRBC was responsible for project implementation.

The project commenced in December 2011 and concluded in June 2014. The road was officially inaugurated on February 5, 2016.