Active Development AidData Chinese Aid

[Cancelled] Bank of China (Beijing and Liaoning Branches) contribute to $167.3 million loan for 200 Prefabricated Millennium Education Units Project

$41.62M USD

Funder	Bank of China (BOC)
Recipient Organization	Government of Ecuador
Country	Ecuador
Start Date	Dec 22, 2016
End Date	Aug 05, 2029
Duration	4,609 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`58859`

Grant Description

Bank of China (Beijing, Liaoning, and Panama Branches) contribute to $167.37 million syndicated loan for 200 Prefabricated Millennium Education Units Project On October 26, 2015, Bank of China Limited sent a set of indicative terms and conditions (classified as 'strictly confidential') to Ecuador's Ministry of Finance for a Sinosure-backed buyer's credit facility for the 200 Prefabricated Millennium Education Units Project.

Then, on December 22, 2016, the Government of Ecuador signed a $167,371,800 syndicated term loan facility agreement with five banks — Bank of China Limited, Beijing Branch, Bank of China Limited Liaoning Branch, Bank of China Limited, Panama Branch, and Deutsche Bank AG, Hong Kong Branch — for the 200 Prefabricated Millennium Education Units Project.

Bank of China Limited — through three different branches — contributed $117,160,260 to the loan.

The Panama Branch of Bank of China Limited contributed $58,580,130, while the Beijing Branch of Bank of China Limited contributed $48,540,130, the Liaoning Branch of Bank of China Limited contributed $10,040,000, and the Hong Kong Branch of Deutsche Bank AG contributed $50,211,540.

📋 Loan / Grant Terms

💰 Loan Amountcarried the following borrowing terms: a 12-year maturity

📅 Maturity12 years

⏳ Grace Period2 years

The borrower was responsible for making 20, equal, semi-annual repayments.

The borrower was expected to use the proceeds of the loan to finance 85% of the total cost of a $196,908,000 commercial contract between Ecuador’s Ministry of Education and China Railway N.9 Engineering Group Co.

Ltd. (CREC9), which was signed on August 18, 2015 [contract ID#056-MINEDUC-2015] and amended on April 12, 2016 [contract ID#004-MINEDUC-2016].

The Government of Ecuador was responsible for paying the remaining 15% ($29,536,200.00) through advance payment to CREC9, which was made by Ecuador’s Ministry of Education on May 18, 2016.

The purpose of the project was to procure, assemble, and install 200 prefabricated Millennium schools (educational units). Project implementation commenced on or around June 20, 2016, shortly after the advance payment was made.

Then, on March 27, 2018, Ecuador’s Ministry of Education announced that it planned to take legal action against CREC9 to recover its advance payment worth 15% of the commercial contract value.

On July 13, 2018, Ecuador’s Ministry of Education unilaterally terminated its commercial contract with CREC9 and attempted to assess a fine worth $29,116,785, citing technical breaches, cost overruns, and untimely installation of the units within the period stipulated in the commercial contract.

At the time of contract termination, 50 prefabricated education units were installed and at least 11 loan disbursements had taken place.

CREC9 reported at the time of contract termination that the monetary value of the work that it had performed was $78 million.

Bank of China Panama Branch's contributions to the syndicated loan are captured via Records ID #92567 (estimated disbursement) and #110045 (estimated cancellation).

Bank of China Beijing and Liaoning Branches contributions are captured via Records ID #110056 (estimated disbursement) and #58859 (estimated cancellation).

📋 Staff Comments

The Spanish project title is La adquisición de 200 unidades educativas provisionales tipo milenio (prefabricadas) incluido su ensamblaje, instalación y puesta en operación, a nivel nacional or El Proyecto «Nueva Infraestructura Educativa» or La construcción de 200 escuelas del milenio en Ecuador. The Chinese project title is 厄瓜多尔教育部 200 所“千年学校”临时学校项目 or “千年学校”建设项目.
The loan agreement can be accessed in its entirety via https://www.dropbox.com/scl/fi/699dsnitirg9wjzdncw77/Ecuador-2016-Bank-of-China-and-Deutsche-Bank-Syndicated-Loan-Agreement-for-the-200-Prefabricated-Millennium-Education-Units-Project.pdf?rlkey=ju8yabt8tr4oxu8vgh5yzc5te&dl=03. 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 'strictly confidential' indicative terms and conditions that Bank of China Limited transmitted to Ecuador's Ministry of Finance on October 26, 2015 can be accessed in their entirety via https://www.dropbox.com/scl/fi/smcncj2fowbk2k2v63vll/ANEXO-5-Indicative-Terms-and-Conditions.pdf?rlkey=douwxbh9eq44o6xylv67dh6ly&dl=05. A detailed (ex ante) amortization table for the loan can be accessed on pg. 8 of https://www.dropbox.com/scl/fi/smcncj2fowbk2k2v63vll/ANEXO-5-Indicative-Terms-and-Conditions.pdf?rlkey=douwxbh9eq44o6xylv67dh6ly&dl=06. In order to estimate the value of the loan disbursements that took place prior to the cancellation of the commercial contract, AidData subtracts the value of the advance payment ($29,536,200) from the value of the work that had been performed as of July 13, 2018 ($78 million). It then multiples this value ($48,463,800) by the percentage of each bank's contribution to the syndicated loan. The total value of the loan commitment was $167,371,800. The Panama Branch of Bank of China Limited contributed $58,580,130 (35% of the total loan commitment), while the Beijing Branch of Bank of China Limited contributed $48,540,130 (29% of the total loan commitment), the Liaoning Branch of Bank of China Limited contributed $10,040,000 (6% of the total loan commitment). AidData has estimated therefore that the Panama Branch disbursed $16,962,330, the Beijing Branch disbursed $14,055,170.3, and the Liaoning Branch disbursed $2,907,159.
The undisbursed (cancelled) amounts from each branch are estimated to be $41,617,800 from the Panama Branch, $34,484,960 from the Beijing Branch, and $7,132,840 from the Liaoning Branch.
A letter for information on the signing of the contract can be accessed in its entirety via https://www.dropbox.com/scl/fi/ng77objhdqcqzceiaxxh9/ANEXO-2-MINEDUC-CGP-2015-00216-OF.-Se-informa-sobre-suscripci-n-del-contrato.pdf?rlkey=54e3tkfel8v5hgflex18588dx&e=1&dl=0

📚 Sources & References

Actualización de prioridad Proyecto 'Nueva Infraestructura educativa'
Ministerio de Educación, 2019 Bond Prospectus Government of Ecuador, 8 Oficio nro
Actualización de prioridad del proyecto 'Nueva Infraestructura educativa'
ANEXO 12 OFICIO No. MF-SFP-2016-723. Respuesta a consultas sobre instrumento legal
ANEXO 13 Oficio No 07577. Autorización a pactar arbitraje internacional
ANEXO 14 Acta Resolutiva 023. Autoriza la contratación del endeudamiento
ANEXO 5 Indicative Terms and Conditions
ANEXO 9 CONTRATO MODIFICATORIO AL CONTRATO No.056-MINEDUC-2015
ARAUZ FIRMÓ EL ENDEUDAMIENTO DE LA PATRIA – PARTE 2
Boletín de Ejecución Presupuestaria Enero - Marzo 2015
China Railway N°9 busca mediación para continuar contrato de construcción de escuelas
CHINESE FINANCE TO LAC IN 2015: Doubling Down*
Compañía china dice que las escuelas del Siglo XXI están bien
Contratos de crédito externos o internos
Convenio Subsidiario Chino
CORTE PROVINCIAL DE JUSTICIA DE MANABI - SALA DE LO PENAL DE LA CORTE PROVINCIAL DE MANABI
Del Ministerio de Educación
Ecuador 2016 Bank of China and Deutsche Bank Syndicated Loan Agreement for the 200 Prefabricated Millennium Education Units Project
Ecuador: Sinohydro is willing to assume responsibilities for Coca-Codo Sinclair
Ecuador’s Leveraging of China to Pursue an Alternative Political and Development Path
El Empalme: Abandonados
EL Gobierno Ecuatoriano Ahora Construira Escuelas del 'Siglo XXI'
El Ministerio de Educación informa sobre la situación del proceso de terminación unilateral del contrato con China Railway No.9
El Ministerio de Educación reitera la terminación unilateral del contrato con China Railway No.9 Engineering Group CO. Ltda.
El Ministerio de Educación terminó de manera unilateral el contrato con la empresa China Railway No.9 Engineering Group Co. Ltda
Elefantes blancos: la estafa social de las escuelas del milenio
External and internal credit contracts
Línea de Tiempo
Memorando No. MF-SFP-2016-618
MINEDUC-CGP-2015-00216
MINEDUC-CGP-2016-00112-OF. Pedido de instrumento legal
OFICIO No. MINFIN-SFP-2015-374
OFICIO No. MINFIN-SFP-2015-866
Oficio No. MINFIN-SFP-2016- 0036
Petición para legalizar el contrato modificatorio
SEÑORES JUECES DE LA SALA PENAL Y TRÁNSITO DE LA CORTE PROVINCIAL DE JUSTICIA DE MANABÍ
中国融资支持厄瓜多尔学校建设
中国融资支持厄瓜多尔学校建设
中铁九局承建的200所“千年学校”项目支持厄瓜多尔建设 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.

All Grantees

Government of Ecuador

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