Active Development AidData Chinese Aid

China Eximbank signs $1.6 billion oil-backed loan framework agreement for infrastructure projects

$1.6M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Republic of Congo
Country	Congo
Start Date	Jun 19, 2006
End Date	Apr 30, 2031
Duration	9,081 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`60219`

Grant Description

China Eximbank signs $1.6 billion oil-backed loan framework agreement for infrastructure projects On June 19, 2006, China Eximbank and the Republic of Congo signed a $1.6 billion loan framework agreement — also known in the Republic of Congo as the “strategic partnership” (“partenariat stratégique”) — that allowed the Republic of Congo to obtain China Eximbank loans for infrastructure projects through a securitization mechanism: Société Nationales des Pétroles Congolais (SNPC)—the country’s state-owned oil company—agreed to deposit a portion of the cash proceeds from its oil exports into an escrow account that is controlled by China Eximbank.

The borrower was required to keep a minimum deposit balance of 15-20% of total outstanding loans in an escrow account. This framework agreement was ratified on October 26, 2006.

According to a 2019 report published by the Republic of Congo’s National Assembly, all loans approved under the framework agreement had an interest rate of 0.25%, maturities between 13-years and 20-years, and grace periods between 3 and 5-years.

At least 13 projects were supported by 19 separate, USD-denominated China Eximbank loans under this framework agreement: (1) Power Transmission Network Associated with the Imboulou Hydropower Plant Project (see Record ID#1049); (2) Phase 1 of the Pointe-Noire-Brazzaville Road (RN1) Construction Project, which was supported by at least four separate loans for four subsidiary projects: the Pointe Noire-Malélé Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Record ID#68874); the Malélé-Les Saras Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Record ID#72780); the Les Saras-Mvou Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Record ID#72781); and the Mvou-Dolisie Section of the Pointe-Noire-Brazzaville Road (RN1) Construction Project (captured in Record ID#72782); (3) Phase 1 of the Owando-Makoua-Ouesso Road (RN2) Construction Project, which was supported by three separate loans for three subsidiary projects: the Owando-Makoua Section of the Owando-Makoua-Ouesso Road (RN2) Construction Project (captured in Record ID#12892); the Makoua-Mambili Section of the Owando-Makoua-Ouesso Road (RN2) Construction Project (captured in Record ID#72791); and the Mambili Bridge Project Construction Project (captured in Record ID#72792); (4) Phase 1 (Obouya-Boundji-Okoyo Section) of the Obouya-Gabon Border Road (RN3) Construction Project (captured in Record ID#14829) (5) Phase 1 of Maya-Maya International Airport Project (captured in Record ID#161) (6) Phase 2 of Maya-Maya International Airport Project (captured in Record ID#141) (7) Ollombo Airport Construction Project (captured in Record ID#59241) (8) Djiri Water Treatment Plant Extension Project (captured in Record ID#69323) (9) Djiri Water Treatment Distribution Network Project (captured in Record ID#69335) (10) Djiri Water Treatment Plant Rehabilitation Project (captured in Record ID#69336)  (11) August 15 Camp Housing Units Construction Project (captured in Record ID#68883) (12) Oyo Hospital Construction Project (captured in Record ID#68871) (13) Phase 1 of National Telecommunication Coverage Project (captured in Record ID#30497 and Record ID#57477) According a January 2015 decree issued by the Republic of Congo (Décret n° 2015-178 du 21 janvier 2015), the list of projects eligible for approval under the framework agreement was eventually expanded to include: (14) Oyo Inland Wharf Construction Project (captured in Record ID#30502 and Record ID#72815) (15) Power Transmission System Associated with the Liouesso Hydroelectric Dam Construction Project (captured in Record ID#58276) (16) 19.2MW Liouesso Hydroelectric Dam Construction Project (captured in Record ID#31028) (17) Mpila Memorial Construction Project (captured in Record ID#58721) (18) Brazzaville Shopping Center Construction Project (captured in Record ID#58408) (19) Mpila Twin Towers Construction Project (captured in Record ID#58720) (20) Congo-Océan Railroad Rehabilitation Project (captured in Record ID#59161) (21) Pointe-Noire Mineral Port Construction Project (captured in Record ID#30501) (22) Aircraft Acquisition Project (23) Brazzaville-Obouya Road Construction Project (24) Sibiti-Zanaga-Djambala Road Construction Project (25) Transformation of National Analog TV Into Terrestrial Digital TV Project (captured in Record ID#57584) (26) Pointe-Noire Potable Water Project (27) 264 Mpila Social Housing Units Construction Project (captured in Record ID#31029) The cash balance in the China Eximbank-controlled escrow account was $534,238,226 (CFA 272,846,414,000) in 2011, an unknown amount in 2012, an unknown amount in 2013, an unknown amount in 2014, an unknown amount in 2015 (equivalent to 26% of SNPC oil sales in 2015), $281,560,937 in 2016 (equivalent to 7,558,672 barrels of oil or 32% of SNPC oil sales in 2016), $338,285,020 in 2017 (equivalent to 23.25% of SNPC oil sales in 2017), $513,780,005 in 2018 (equivalent to 7,411,386 barrels of oil, eight oil cargoes, or 30.22% of SNPC oil sales in 2018), $523,547,187 in 2019 (equivalent to 8,228,065 barrels of oil, 9 oil cargoes, or 32.56% of SNPC oil sales in 2019), $266,659,781 in 2020 (equivalent to 6,349,813 barrels of oil, 7 oil cargoes, or 31.61% of SNPC oil sales in 2020), $319,164,228 in 2021 (equivalent to 4,585,056 barrels of oil or 21.4% of SNPC oil sales in 2021), and $356,343,684 in 2022 (equivalent to 3,634,514 barrels of oil 13.09% of SNPC oil sales in 2022).

📋 Staff Comments

In cases where the actual maturity of a subsidiary loan is missing, AidData imputes a value (16.5-years) at the middle of the distribution of this maturity range as an approximation. Likewise, in cases where the actual grace period of a subsidiary loan is missing, AidData imputes a value (4-years) at the middle of the distribution of this range as an approximation.
According to China Eximbank, it issued a buyer’s credit loan in support of Phase 1 of the Maya-Maya International Airport Project. However, it is unclear if this means that all of the subsidiary loans approved under that framework agreement were buyer’s credit loans. This issue merits further investigation.
On pg. 26 of https://pnd.plan.gouv.cg/wp-content/uploads/2018/07/Parlement-CMEB-24-07-18.pdf, the Congolese Government states that “Pour garantir les prêts, les autorités congolaises doivent maintenir un solde minimum de dépôt équivalant à environ 20% du total de l’encours des prêts sur un compte séquestre à l’EXIM Bank de Chine, à partir des ventes de pétrole à la Chine.” [Translation: As a source of collateral, the Congolese authorities are required to keep a minimum cash balance equivalent to twenty percent of total outstanding debt to China Eximbank in an escrow account (that China Eximbank controls) from the proceeds of their oil sales to China.] On this point, also see https://eiti.org/sites/default/files/attachments/republic_of_congo_-_second_validation_final_assessment_clean.pdf and https://eiti.org/sites/default/files/attachments/republic_of_congo_second_validation_msg_comments_en.pdf and https://eiti.org/sites/default/files/attachments/eiti_-_roc_eiti_2017_validation_-_draft_report_on_initial_data_collection_and_stakeholder_co.pdf and https://eiti.org/sites/default/files/attachments/en_eiti_gn_6.2.pdf and https://www.imf.org/-/media/Files/Publications/CR/2019/1COGEA2019001.ashx4. The escrow account balance information is drawn from https://eiti.org/sites/default/files/2022-02/en_eiti_gn_2.6.pdf and https://eiti.org/sites/default/files/2022-07/Republic%20of%20the%20Congo%202020%20EITI%20Report.pdf5. In a July 2023 report, the IMF reported that 'the [Congolese] authorities continued accumulating excess deposits in the escrow account in China during 2020 that provides temporary guarantees for debt service to China. The authorities were able to use escrow account balances during the COVID-19 pandemic for debt service to China but reimbursed the escrow account again with the contractual amount in 2022 to meet their contractual obligations, including deposits guaranteeing the payment of three future semi-annual debt service installments.' See https://www.imf.org/en/Publications/CR/Issues/2023/07/24/Republic-of-Congo-Republic-of-Congo-Third-Review-under-the-Three-year-Arrangement-under-the-536899

📚 Sources & References

Republic of Congo : 2008 Article IV Consultation
Requests for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries, and Financing Assurances Review: Staff Report; Staff Statement and Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Congo
Republic of Congo : 2007 Article IV Consultation: Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Congo
Plan National de Développement 2018-2022
中、刚（布）互利合作
JOURNAL OFFICIEL DE LA REPUBLIQUE DU CONGO paraissant le jeudi de chaque semaine à Brazzaville, ÉTAT DES LIEUX DE LA DETTE PUBLIQUE EN LA RÉPUBLIQUE DU CONGO
Magazine de la Délégation Générale des Grands Travaux
Rapport sur la collecte initiale de données et la consultation des parties prenantes
Loi N.34-2006 du 26 octobre 2006, 2006 framework agreement for financing 9 projects in Republic of Congo
Resource-Backed Loans: Pitfalls and Potential
JOURNAL OFFICIEL DE LA REPUBLIQUE DU CONGO paraissant le jeudi de chaque semaine à Brazzaville
REPUBLIC OF CONGO ECONOMIC UPDATE
RAPPORT N°23 SUR LE PROJET DE LOI AUTORISANT LA RATIFICATION DE L’ACCORD COMPLEMENTAIRE SUR LA RESTRUCTURATION DE LA DETTE DU CONGO ENVERS LA CHINE
ITIE Rapport 2018
ITIE Rapport 2017
ITIE Congo Rapport 2019
ITIE Rapport 2016
ITIE en République du Congo Rapport 2022
Second Validation of the Republic of Congo: Final assessment by the EITI International Secretariat 3 July 2020
Republic of Congo Second Validation MSG Comments
EITI REQUIREMENT 6.2 October 2020
Initiative pour la Transparence dans les Industries Extractives - ITIE Congo June 2022, 2014 ARTICLE IV CONSULTATION—STAFF REPORT; PRESS RELEASE AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR THE REPUBLIC OF CONGO
INITIATIVE POUR LA TRANSPARENCE DANS LES INDUSTRIES EXTRACTIVES Rapport 2017
Initiative pour la Transparence dans les Industries Extractives en République du Congo Rapport ITIE 2021 December 2023
Rapport ITIE 2015 December 2017
Rapport ITIE 2013 December 2014, 2012 EITI Report December 2013
RAPPORT DE RECONCILIATION DES PAIEMENTS ET DES RECETTES EXTRACTIVES AU TITRE L’EXERCICE 2011 October 2012
Rapport ITIE Congo 2022 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.