Completed Mixed AidData Chinese Aid

ICBC provides $2.5 billion loan for Phase 1 of Kilamba Kiaxi Housing Construction Project (Linked to Record ID#67333, #53063)

¥2.5M RMB

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Sonangol E.P.
Country	Angola
Start Date	Nov 19, 2010
End Date	Aug 11, 2028
Duration	6,475 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`47101`

Grant Description

ICBC provides $2.5 billion loan for Phase 1 of Kilamba Kiaxi Housing Construction Project On November 19, 2010, the Industrial and Commercial Bank of China (ICBC) and Sonangol Finance Limited — a wholly owned subsidiary of Sociedade Nacional de Combustiveis de Angola (Sonangol), Angola's state-owned oil company — signed a multi-currency (USD and RMB), oil-backed, $2.5 billion pre-export term facility (loan) agreement for Phase 1 of Kilamba Kiaxi Housing Construction Project.

📋 Loan / Grant Terms

💰 Loan Amountincluded an 8-year maturity

📅 Maturity8 years

⏳ Grace Period0.4116 years

💹 Interest Rate3.9454%

The loan was serviced and secured with the proceeds from the sale of 10,000 barrels per day (bpd) of oil in 2010, 40,000 bpd between 2011-2013, and 30,000 bpd between 2014-2016.

It was ultimately repaid ahead of schedule (on June 30, 2017) as part of a debt refinancing agreement with China Development Bank (captured via Record ID#53063).

The loan proceeds were used to be used by the borrower partially finance a $3.535 billion commercial (EPC) contract for the construction of the Kilamba Kiaxi housing district, which is 30 kilometers southwest of Luanda and has a capacity to accommodate 200,000-500,000 people.

The project involved the construction of 710 buildings with 20,002 apartments, 246 shops, 24 kindergartens, 9 primary schools, 8 secondary schools, 2 electricity substations, 1 sewage treatment plant, 1 water treatment plant, primary and secondary municipal roads, and various municipal systems such as water supply, power supply, telecommunications, sewage, drainage, traffic signals, etc.

CITIC Construction — a subsidiary of CITIC Group, a Chinese state owned conglomerate — was the contractor responsible for project design and implementation. It signed the EPC contract on November 14, 2007 and a groundbreaking ceremony took place on August 31, 2008. A total of 60,000 workers implemented this project, 60% of whom were Angolan workers.

The originally scheduled completion date of the project was April 2012 but the project was ultimately completed on September 17, 2012. According to CITIC, the housing project had achieved a 75% occupancy rate by May 2014.

However, in August 2010, the President of Angola promised that the state-subsidized housing units would be sold to Angolan families for a maximum price of $60,000, and the units were ultimately marketed at price points (between $125,000 – $200,000) that were two to three times the promised price point and well beyond the means of the families for which they were ostensibly intended.

This prompted criticism that the project primarily served as vehicle for wealth generation for the politically connected.

📋 Staff Comments

This project is also known as the First Phase of the Angola Social Housing Project or Phase 1 of the Kilamba Kiaxi Satellite City Project or Phase 1 of the Kilamba Kiaxi New Town Project. The Portuguese project title is Nova Centralidade de Kilamba Kiaxi. The Chinese project title is 建的安哥拉KK新城一期工 or 安哥拉K.K.一期项目 or 安哥拉社会住房项目K.K.一期工程 or 安哥拉社会住房项目凯兰巴 • 凯亚西 or 安哥拉社会住房项目一期工.
ICBC also provided a $550 million loan for Phase 2 of the Kilamba Kiaxi Housing Construction Project (as captured via Project ID#67333).
According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Angola was 3.9454% in 2010. AidData estimates the interest rate of the ICBC 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 4. 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 0.4116-years in 2010. AidData estimates the grace period of the ICBC 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=05. The loan's maturity length is identified in the Sonangol's 2014 annual financial report (see https://s3.amazonaws.com/rgi-documents/914df033bd5c850ceab55c1c4f8d5db1e17bd77c.pdf).
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

Check Out The Massive Chinese-Built Ghost Town In The Middle Of Angola
President dos Santos briefed on urban projects in Kilamba Kiaxi
Uncovering African Agency: Angola's Management of China's Credit Lines
中国工商银行与安哥拉政府签署多币种融资协议
Resolução n.º 128/09
China's architectural aid: Exporting a transformational modernism
Session 5: Housing Finance
Jobs and Growth Practice in Angola: Kilamba Kiaxi (K.K.) Satellite City Project, 2015 中国企业海外可持续发展报告
Cidade do Kilamba Kiaxi fica pronta no próximo ano
中国工商银行行长杨凯生一行视察中信建设安哥拉社会住房项目
Angolan Social Housing Project
KILAMBA KIAXI SOCIAL HOUSING
习近平与驻安哥拉中资企业代表座谈并发表讲话
Presidente angolano elogia projeto da CITIC no país
中信建设承建的安哥拉KK新城一期工程荣获鲁班奖
中信建设安哥拉社会住房项目凯兰巴---凯亚西一期工程完工庆典成功举行
中铁四局承建安哥拉社会住房项目一期工程完成交验
安哥拉社会住房项目一期工程正式移交
Angola Luanda NCC Social Housing Project
Chinese Loans to Africa Database
Eastern Promises: New Data On Chinese Loans in Africa, 2000 to 2014
Resolução n.º 124/09
Diário da República n.º 245
China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil
UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA
安哥拉社会住房项目工程正式开工集团公司老董事长王军、总经理常振明等领导出席典礼, ‘Oil for Housing’: Chinesebuilt New Towns in Angola
品牌国际化
Relatório de Gestão e Contas Consolidadas 2014
Private Chinese Loans to Angola November 2023 Data Extraction
RELATÓRIO DE GESTÃO & CONTAS CONSOLIDADAS 2017 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.

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Sonangol E.P.

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