China Eximbank provides $83.909 million buyer’s credit loan for construction and equipping of technical institutes, administrative and management institutes, and secondary schools in Luanda, Bengo, Cabinda, Namibe, and Zaire Provinces (Linked to Record ID#42029 and #85457)

China Eximbank provides $83.909 million buyer’s credit loan for construction and equipping of technical institutes, administrative and management institutes, and secondary schools in Luanda, Bengo, Cabinda, Namibe, and Zaire Provinces 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 July 2006, China Eximbank and the Government of Angola signed a $83,909,196.70 subsidiary buyer’s credit loan agreement under the MLFA for the construction and equipping of technical institutes, administrative and management institutes, and secondary schools in Luanda, Bengo, Cabinda, Namibe, and Zaire Provinces.

The proceeds of this loan were used to partially finance a $93,232,440.78 commercial (EPC) contract with Sinomach, which was signed on July 27, 2006.

The purpose of the project was to construct and equip technical institutes, administrative and management institutes, and secondary schools in Luanda, Bengo, Cabinda, Namibe, and Zaire Provinces. Sinomach was the EPC contractor responsible for project implementation. The EPC contract supporting this project went into effect on July 17, 2007.

The project had achieved an 84% completion rate as of June 2008. In total, 863 Angolan works and 738 Chinese workers were employed to support the implementation of this project.