Active Development AidData Chinese Aid

CDB provides $2 billion loan to Sonangol for Lobito Refinery Construction Project and other unspecified oil and gas projects

$2M USD

Funder	China Development Bank (CDB)
Recipient Organization	Sonangol E.P.
Country	Angola
Start Date	Dec 12, 2014
End Date	Nov 18, 2026
Duration	4,359 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`36148`

Grant Description

CDB provides $2 billion loan to Sonangol for Lobito Refinery Construction Project and other unspecified oil and gas projects On December 12, 2014, China Development Bank (CDB) and Sonangol Finance Limited — a wholly owned subsidiary of Sociedade Nacional de Combustiveis de Angola (Sonangol), Angola's state-owned oil company — signed a $2 billion pre-export term facility (loan) agreement for the development of oil and gas projects, such as the Lobito Refinery Construction Project The loan's estimated borrowing terms included a 10-year maturity period, 0.5316-year grace period, an an annual interest rate of 1-month LIBOR plus a 3.4% margin.

It was reportedly secured by (i.e. collateralized with) oil exports from Sonangol.

The loan's (principal) amount outstanding was AOA 487,097,999,902 as of December 31, 2019, AOA 519,683,199,869 of as December 31, 2020, AOA 332,988,599,845 as of December 31, 2021, AOA 201,476,400,000 as of December 31, 2022, and AOA 165,760,000,000 as of December 31, 2023.

A statement about the loan, posted on Sonangol's website, announced that construction of the country's long-planned second refinery at Lobito would begin in 2015.

Sonangol had been under pressure for a long time to build a new refinery as it heavily depends on imports for its fuel requirements. However, construction of the Lobito refinery was frozen in 2016 due to high costs.

Then, in 2021, Joaquim de Sousa Fernandes, chairman of the executive council of Sonaref (a subsidiary of Sonangol), announced that the project was being revived and the construction of the Lobito refinery was scheduled for completion in 2025.

On October 20, 2023, China National Chemical Engineering Company (CNCEC) signed on to provides construction, technical support and inspection.

📋 Staff Comments

According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Angola was 0.5316-years in 2014. AidData estimates the grace period of the China Development Bank loan that supported the Sonangol Finance Limited by using this figure. See https://www.dropbox.com/scl/fi/qi2hvg1s05nsak3n1n83u/Private-Chinese-Loans-to-Angola-November-2023-Data-Extraction.xlsx?rlkey=0aq7jdxm29ynbw4yh1bn07c7m&dl=0 2. For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
The loan's maturity is drawn from a 2014 financial report from Sonangol. See https://s3.amazonaws.com/rgi-documents/914df033bd5c850ceab55c1c4f8d5db1e17bd77c.pdf4. The amounts outstanding are drawn from Sonangol's annual financial statements (https://www.sonangol.co.ao/relatorio-contas/).
A pre-export finance (PXF) facility an arrangement in which a commodity (e.g. oil) producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed.

📚 Sources & References

China loans Angola's Sonangol $2 bln for oil projects
Angola Gets U.S 2 Billion Credit From China
Sonangol gets US$2 bln credit line from China Development Bank
Angola Gets U.S 2 Billion Credit From China
China's loans for oil: asset or liability?
China in Angola: The Pros and Cons of China'a Aid Structure
UPDATE 1-China to loan Angola's Sonangol $2 bln for oil projects
Relatório de Gestão e Contas Consolidadas 2014
Sonangol obtains Chinese loan
BU_PITCH_ENGLISH_2018
US EXIM Bank Information Sheet
Chinese Loans to Africa Database
Eastern Promises: New Data On Chinese Loans in Africa, 2000 to 2014
Sonangol e Banco de Desenvolvimento da China assinam importante acordo de financiamento
中国开发银行向安哥拉国营石油公司放贷
中开发银行贷款安石油20亿美元
REFINERY NEWS ROUNDUP: Some refineries in Africa remain offline
Sonangol suspends works at the Lobito refinery in Angola
品牌国际化
Relatório de Gestão e Contas Consolidadas 2014
Private Chinese Loans to Angola November 2023 Data Extraction
SONANGOL E.P. Consolidated Financial Statements 2021
SONANGOL E.P. Consolidated Financial Statements 2022
SONANGOL Consolidated Financial Statements 2023
SONANGOL E.P. Consolidated Financial Statements 2020
Sonangol MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2016
RELATÓRIO DE GESTÃO & CONTAS CONSOLIDADAS 2017
Relatório e Contas 2015 Consolidado
Sonangol Consolidated Consolidated Financial Statements 2019 (Demonstracoes Financeiras Consolidadas)
Sonangol e chinesa CNCEC firmam contrato para a construção da Refinaria do Lobito
SONANGOL E.P. Consolidated Financial Statements 31 December 2023
Sonangol Consolidated Report and Accounts 2018 (RELATÓRIO DE GESTÃO E CONTAS CONSOLIDADAS) 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.