China National Electric Wire & Cable Import & Export Corporation 

 

Leading Chinese Power Generation, Transmission and Distribution Turnkey Contractor and Equipments Supplier of turbine, diesel generator, transformer and XLPE cables

 

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Financial Support from Chinese Government

Chinacables is a subsidiary of China National Machinery Industry Corporation (SINOMACH), derived from the Ministry of Machinery and Electric Industry of China. SINOMACH is a large scale, state-owned enterprise group under the leadership of the State Assets Supervision and Administration Commission. It have exported 70% of power generation and transmission projects or equipments. As the main company for China to export its heavy equipments and machinery for power generation, transmission, telecommunication, metallurgy, automobile, railway, highway or road, China policy bank of China Import-Export Bank will provide financial support to Sinomach and its subsidiaries, including Chinacables, for their projects in the foreign markets in these industries.

In order to widen Chinacables' business scopes, it will cooperation with companies from Sinomach, such as CMEC, to compete in the world market for projects in power generation, transmission, telecommunication, metallurgy, automobile, railway, highway or road or other projects which is eligible for Chinese government preferential fund or loan support. According to China preferential loan policy, policy banks will finance for both Chinese export of mechanic and electronic products, complete set of equipment, and high- and new-tech products and undertaking of offshore construction contracts and overseas investment projects. Sinamach and Chinacables, CMEC are eligible to apply these loans and credits thanks to their technical, commercial strength in the world construction market and their key status in China's heavy machinery and equipment export section.

We usually provide three main financial supports for our projects in the foreign countries upon sovereign guarantee, reputable bank guarantee or other securities which are comfortable to us. The three financial funds or credits are:

bulletChinese government preferential concessional loan
bulletExport buyer's credit
bulletExport Seller's Credit

For details, please visit our China Import-Export Bank website.

 

CHINESE GOVERNMENT CONCESSIONAL LOAN

Basic Concept

bulletChinese Government Concessional Loan refers to the medium and long-term, low interest rate credit extended by the China Eximbank under the designation of the Chinese Government, to the Government of the Borrowing Country with the nature of official assistance.
bulletThe Export-Import Bank of China is authorized by the Chinese Government as the sole lender of the Concessional Loan.

Objective

bulletPromote economic development and improve living standard in developing countries
bulletBoost economic cooperation between developing countries and China

Resource and Utilization of Funds

bulletChina Eximbank raises funds in domestic financial market through bond issuing. Chinese Government subsidizes interest rate difference.
bulletThe Loan is mainly used to procure mechanical and electronic products, complete sets of equipment, high tech product, services as well as materials from China.

Main project sectors

bulletinfrastructure
Such as energy, transportation, telecommunication

bulletIndustrial
Such as manufacturing, mining etc.

bulletSocial welfare
Such as health-care, housing etc.

Basic Criteria for Project

bulletThe project should be approved by both the Chinese Government and the government of the Borrowing country
bulletThe project should be technically feasible and can generate favorable economic returns
bulletThe project should have good social benefits
bulletChinese enterprises should be selected as contractor/exporter
bulletEquipments, materials, technology or services needed for the project should be procured from China ahead of other countries. In principle, no less than 50% of the procurements shall come from China.

Terms and Conditions of Loan

bulletLoan Amount
In principle, the Loan amount should be no less than RMB 20 million (approximately USD 2.4 million).

bulletLoan Currency
The loan is denominated in Renminbi Yuan

bulletBorrower
Borrower is normally the Government of the Borrowing Country represented by Ministry of Finance

bulletInterest Rate and Maturity Period
Interest Rate and Maturity Period are Fixed by Chinese Government and stipulated in inter-governmental framework agreement

bulletMaturity Period
Maturity Period includes Grace Period and Repayment Period

bulletGrace Period
In Grace Period, the borrower shall pay the interest but no principal

bulletAvailability Period = Drawdown period
Borrower can make drawdown within Availability Period. The Availability Period is included in the Grace Period and matches the implementation period of the project.

bulletInterest payment
Interest is calculated and paid semi-annually. Interest collection dates are fixed on March 21st and September 21st every year.

bulletPrincipal repayment
In repayment period, the principal is repaid semi-annually in equal installments. Principal repayment dates are fixed on March 21st and September 21st every year

bulletManagement Fee
Management Fee is calculated on the basis of the total amount of the Loan and paid in one lump sum before the first drawdown

bulletCommitment Fee
Commitment Fee is calculated on the basis of the undrawn amount of the Loan and paid on interest collection dates

Project Cycle

1 Application

bulletCandidate project can be proposed to the Chinese Government or China Eximbank by Borrowing country based on development plan and strategy
bulletDocuments required
* Application
* The approval of the Government of the Borrowing country
* Feasibility study report: containing the objective, scope and content of the project and detailed information on technical, economical and social aspects.
* The commercial contract or other intention agreements.
* Brief introductions and financial statements of the project executing agency and Chinese contractors/ exporters.

2 Appraisal

bulletChina Eximbank conducts appraisal at its own discretion
bulletReports results to the Chinese Government
bulletFollowing aspects are analyzed during appraisal
* Objective and necessity of the project
* Technical, financial, economical and social aspects of the project
* Macro-economic situation and debt servicing ability of the Borrowing Country
* Management capability and financial strength of executing agency.
* Qualification and performance records of Chinese contractor/exporter.

3 Agreement

bulletInter-governmental Framework Agreement is signed by two Governments, specifying purpose, amount, maturity period and interest rate of the facility
bulletLoan Agreement is signed by China Eximbank and Borrower in line with inter-governmental framework agreement

4 Implementation and Disbursement

bulletBorrower makes drawdown according to Loan Agreement
bulletImplementation is essentially the obligation of the Borrower and the executing agency
bulletChina Eximbank monitors the implementation to ensure the efficient use of funds
bulletThe Borrower reports to China Eximbank progress of project, use of funds and provides necessary assistance
bulletAfter project is completed, the Borrower sends a completion report to China Eximbank

5 Operating and Debt Servicing

bulletExecuting Agency has the responsibility to operate the project. China Eximbank may monitor the project and offer advice when it is necessary.
bulletThe Borrower has the obligation to pay interest and fees and repay the principal according to the provision of Loan Agreement.
bulletAfter a period of operation, China Eximbank makes Ex-post evaluation on the project on a case by case basis.

Disbursement Procedures

Contact Information

Concessional Loan Department
The Export-Import Bank of China


SELLER's CREDIT or Loans to Overseas Construction Contracts

Loans to Overseas Construction Contracts (the Loan) refer to the loans, either in Renminbi or foreign currencies, that the Bank provides to Chinese enterprises for financing their construction projects implemented in foreign countries, which may bring forth the export of Chinese equipment, machinery, building materials, technology, and labor services. The Loan is also applicable to Chinese contractors who win the tender in the international bidding on the projects financed by the World Bank, Asian Development Bank, and other international financial organizations.

Prospective Borrowers

Prospective borrowers of the Loan include Chinese enterprises that are

bulletRegistered with the regional Administration of Industry and Commerce and its local offices;
bulletAccredited with independent legal person status;
bulletAuthorized to handle contract construction abroad; and
bulletQualified with expertise, professionals and technology for such operations.

Qualifications for Loan Application

1. The borrower should demonstrate fine management and operations, have a sound financial position and a favorable credit standing, and should be capable of repaying the principal and interest incurred;

2. The borrower has already signed a contract for undertaking overseas construction projects, which, when necessary, should be accompanied with authorization and approval by competent government authorities;

3. The spin-off exports of Chinese equipment, materials, technology, labor service, and management services that derive from overseas construction contracts should account for no less than 15% of the total value of a specific project contracted;

4. The value of the overseas construction contract should be no less than USD 1 million, with advance payment amounting to no less than 15% of the total contract value in principle. In the case of deferred repayment, a payment guarantee should be provided as acceptable to the Bank;

5. The overseas construction contract shall be expected to offer satisfactory economic returns;

6. The contractor should have license and capability to perform the deal sealed;

7. The host country should remain stable both politically and economically;

8. In the case where repayment is assessed highly risky, appropriate export credit insurance should be arranged as per the requirements of the Bank;

9. Repayment guarantee acceptable to the Bank should be provided; and

10. Other requirement that the Bank deems to be of necessity.

Documents and Materials required for Loan Application

Documents and materials required for applying to the Bank for the Loan include:

1. Loan application;

2. The contract for the construction project and authorization and or approval by competent government authorities, if required;

3. Purchase contract and other commercial contracts related to the construction project;

4. Analysis of economic returns and the cash flow statement of the construction project that the borrower has signed to undertake;

5. A letter of intent for covering export credit insurance if such shall be deemed necessary;

6. The borrower's license for undertaking construction projects overseas, profile statements of both the borrower and the guarantor, a copy of the business license of the borrower having passed the annual examination, audited financial statements of the past three years and audited financial statements of the recent period of the current year, and other documents that demonstrate the credit standings and the operations of both the borrower and the guarantor;

7. Letter of intent for repayment guarantee, or in case of mortgage or pledge, valid certificates of ownership of the property under mortgage or pledge and evaluation reports thereof; and

8. Other relevant documents demanded by the Bank.

Export Buyer's Credit

The Export Buyer's Credit refers to the medium and long-term credit offered by the Bank to creditworthy foreign borrowers to support the export of Chinese capital goods, services and overseas construction projects. With a competitive interest rate and a longer period of time, the Export Buyer's Credit can facilitate foreign importers to make prompt payment to Chinese exporters for the exported products and services. The operations generally follow the Arrangement on Guidelines for Officially Supported Export Credits as developed by OECD.

1.Products and Services Covered by the Credit

Export Buyer's Credit is mainly extended to finance the export of Chinese capital goods such as mechanic and electronic products and complete sets of equipment. It is also available for financing the export of Chinese-built ships, high- and new-tech products & services, and overseas construction projects contracted by Chinese companies.

2.Requirements for Application

bulletThe Borrower

The borrower should be a foreign importer, or the importer's bank, or Ministry of Finance of or other authorized government institutions of the importing country, and should be acknowledged by China Eximbank. The borrower should have reliable credit standing, and should be capable of repaying all the principals and paying the accrued interests and related fees and charges of the loan as prescribed in the agreed repayment schedule.

bulletThe Exporter

The exporter should be an independent legal entity with the acceptable qualification of dealing export operations or overseas projects as verified by authorized Chinese government authorities, and should be capable of implementing the commercial contract. The goods and services exported should fall within the support list of Export Buyer's Credit operated by China Eximbank.

bulletCommercial Contract

The commercial contract that seeks for export buyer's credit should be examined and approved by the Bank, and should satisfy the following requirements:

bulletThe value of the commercial contract should be more than USD 2 million.
bulletThe portion of the Chinese content of exported goods should be no less than 50% of the total value.
bulletThe cash payment (down payment) made by the importer to the Chinese exporter should not be less than 15% of the total contract value or 20% in the case of ship export contract.

The requirement of the Chinese content portion and the down payment percentage on overseas construction projects should be consistent with relevant policies and guidelines set by the Chinese government.

Subject to the credit policy of the Bank, the borrower is required to provide a repayment guarantee, and when necessary, a sovereign guarantee of the importing country should be provided.

Whether it is necessary to apply for export credit insurance should be decided by the Bank in accordance with the country risk of the borrower.

3.Credit Terms and Condition

bulletLoan Currency

The currency of the loan could be either US Dollar or other currencies acceptable to China Eximbank.

bulletLoan Amount

Generally, the Export Buyer's Credit provided by the Bank for an export project of goods or services shall not exceed 85% of the total contract value, and 80% in the case of a ship export contract. As for an overseas contracting project, the loan amount should follow the regulations of state relevant policies.

bulletMaturity Period

The maximum maturity period is 15 years from the date of the first disbursement of the loan to the last repayment date as stipulated in the loan agreement.

bulletInterest Rate

The interest rate could be either a fixed interest rate on the basis of the Commercial Interest Reference Rate (CIRR) as monthly announced by OECD, or a floating interest rate on the basis of London Interbank offered Rate (LIBOR) plus a certain interest rate spread. For special cases, the interest rate could be negotiated and decided between the lender and the borrower.

bulletDrawdown of the Loan

The availability of drawdown under the loan agreement shall be consistent with the terms and conditions of the commercial contract related.

bulletFees & Charges

The borrower shall pay management fees, commitment fees and exposure fees to China Eximbank.

bulletLoan Application and Approval

An eligible borrower should submit a formal application to China Eximbank for Export Buyer's Credit together with the following documents and materials:

bulletDraft commercial contract or letter of intention, Tendering and bidding documents, feasibility study report on the project and relevant approval documents;
bulletDocumentation that proves the credit standing of the borrower, the guarantor, the importer and the exporter; the financial statements of the borrower and the guarantor;
bulletOther documents and materials required by the Bank.

China Eximbank will examine the application documents submitted by the borrower, confirm the qualification of the borrower and the guarantor, decide credit terms and conditions, and start project appraisal and approval process. Upon approval of the loan, China Eximbank will sign with the borrower a loan agreement on Export Buyer's Credit, and the guarantor will present to the Bank a Repayment Letter of Guarantee.

bulletLoan Disbursement and Repayment

China Eximbank shall disburse the loan to the borrower as prescribed in the loan agreement.

The borrower shall repay to the Bank the principal and pay the interests together with relevant fees of the loan as stipulated in the loan agreement. Unless otherwise specified, once the drawdown period is over, the principal of the loan should be repaid semi-annually in equal installments. The interests incurred should be either paid semi-annually as calculated on the basis of the loan outstanding or follow the terms stipulated in the loan agreement.

bulletWorking Procedures


1. A commercial contract is signed between the exporter and the importer. The value of the contract should be no less than USD 2 million.

2. A loan agreement is signed between China Eximbank and the borrower. The loan amount should not exceed 85% of the commercial contract value while 80% in the case of a ship export project.

3. Repayment guarantee provided by the guarantor to China Eximbank may be required according to the project case by case.

4. Whether to require export credit insurance or not shall be determined by China Eximbank according to the country risk of the importing country.

5. The down payment should not be lower than 15% of the commercial contract value and no less than 20% for a ship export project.

6. The exporter delivers goods to the importer as stipulated in the commercial contract.

7. China Eximbank disburses the loan after the delivery of the goods.

8. The borrower shall semi-annually repay to China Eximbank the principal, the interests and all the fees and charges of the loan in accordance with the provisions of the loan agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

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