HowtogetfinancingforprojectfromChina.doc

steps on applying project financing from chinaby leda greenpower beijing trading and engineering ltd.2009, second version1.which bank to get the financing41.1.the export-import bank of china51.1.1.mission of eximbank61.1.2.business scope of eximbank008 yearly loan quota of eximbank71.2.china development bank71.2.1.steadily promoting international cooperation and supporting the implementation of the states go global strategy91.2.2.loans terms of cdb101.3.which bank should be the priority bank for financing your projects101.3.1.export buyers credit111.3.2.preliminary terms of soft loan and commercial loan172.famous chinese epc is your important financing facilitator182.1.which industry eximbank supports as priority182.2.main business of chinese companies192.3.why epc is the key to help you getting financing202.3.1.epc is supported by eximbank policy212.3.2.epc has well established business relationship with eximbank212.3.3.epc has the full ability to supply documents required by eximbank212.3.4.epc can be experienced financing facilitator222.3.5.epc has financial strength232.3.6.epc is the main contractor282.4.how to identify the right epc as your partner for financed projects282.4.1.years in the specific business282.4.2.companys english name292.4.3.location of the office292.4.4.why famous epc does not attend public tenders302.4.5.asking them questions on eximbank financing302.5.steps to work with epc?312.5.1.mou between agent and chinese epc332.5.2.provided more detailed information by agent to chinese epc342.5.3.issue letter of intent from epc to your employer342.5.4.employer reply with loi/sign mou with epc342.5.5.employer provides more detailed technical & commercial documents,352.5.6.epc designs technical & commercial documents352.5.7.agency agreement between epc and agent362.5.8.epc contract signed between epc and employer373.how the epc assess projects373.1.why chinese epc or supplier is slow to response?373.2.chinese epc judges by commitment and readiness374.how eximbank assess projects385.what alternative to sovereign guarantee?385.1.natural resources as payback replacing sovereign guarantee405.1.1.chinese companies sign $6 billion congo deal405.2.nations without official diplomatic relation with china416.who should you contact in your sponsors nation, and their functions417.how to get your payment from the project as agent438.the role of the sinosure in foreign financing438.1.introduction of sinosure438.2.medium- and long-term export credit insurance448.3.sinosures insurance cost449.what are the common mistakes you might commit?449.1.only public tender information:449.2.only project conception:459.3.seeking signing agreement at very earlier stage:459.4.vendoring information around:469.5.mistaking bank guarantee as sovereign guarantee, did not confirm the sovereign guarante:469.6.contacting non famous chinese epcs479.7.working with lower level of government departments:479.8.loi letter not signed by minister of finance4810.important document samples or formats for applying with epc and eximbank4810.1.sample memorandum of understanding4810.2.memorandum of understanding4910.3.additional 10 billion usd concessionary loan at low rate from china for 2009536.1.1.general introduction of the additional concessionary loan536.1.2.procedure for application:546.1.3.what should you and we do?5410.4.sample letter of intent for applying soft loan from china eximbank5510.5.buyers credit application5610.6.15% first instalment on epc contract to be financed by eximbank5910.7.documents further needed by eximbank for soft loan application6010.8.reissue the application letter for the soft loan in the updated standard format required by eximbank6110.9.loan proposal for preferential buyer credit loan6210.10.basic check list for power projects6310.10.1.questionnaire for gas / hfo / liquid fuel based power plant6310.10.2.basic checklist of a thermal power plant project6710.11.more soft loan during 4th egypt and china prepare for focac inter-ministerial summit7110.12.china has promised to give africa $ 10 billion ( 6 billion) in concessional loans7310.13.important links75steps on applying project financing from chinaleda greenpower (beijing) trading & engineering co. ltd.1. which bank to get the financingin china, there are policy banks, developing banks, commercial banks and state owned banks, and foreign banks. thanks to strict regulation from government supervision bodies as china central bank and china bank regulatory commission, chinese banks have successfully gone through the current financial crunches which terribly hit the foreign banks. and through decades of planned economy and development, china have accumulated large sum of foreign reserve, mostly denominated in us dollars. this huge reserve about 1.8 trillion usd has been supporting china to provide financing to foreign projects in different financing facilities. and the reserve will be increasing day by day, and then china has the ability to finance projects in the world for the goal of economical benefits from these financing to the world projects.among these banks, generally speaking all of these banks have the business covering loans as soft loan or commercial loans to foreign projects, but their key business scopes differ from bank to bank, and experience for providing financing to foreign projects also play very important role when they make decision whether or not to provide loan to foreign projects.as a policy bank to support chinese high tech electric and machinery industries to export to the world market, esp, to these emerging and developing nations to support these host nations infrastructure and improving local peoples life standards, the export-import bank of china (hereinafter called eximbank) will be the major policy bank to supply financing as soft loan, commercial loan and buyer credit to foreign projects. and also china development bank is still a supplementary source for getting financing from china. but to our experience eximbank is still first choice when applying financing for foreign projects from china. 1.1. the export-import bank of chinahere is the copy of the official website of eximbank of china (/index.jsp): established in 1994 and solely owned by the central government, the export-import bank of china (china eximbank) is a government policy bank under the direct leadership of the state council. its international credit ratings are compatible to the national sovereign ratings. at present, the bank has over ten business branches and domestic representative offices, as well as three overseas representative offices in johannesburg, paris and st. petersburg. it has established and maintained correspondent relationship with more than 300 overseas banks worldwide. as an important force in the backup system of foreign trade and economy and a significant component of the financial system, china eximbank has developed into a key channel of policy financing for exports and imports of mechanic and electronic products, complete set of equipment, and high- and new-tech products, and for offshore construction contracts as well as overseas investment projects. meanwhile, the bank is also the major on lending bank of foreign government loans and the sole lending bank for chinese government concessional loan entrusted by the chinese government. the bank is playing a more and more important role in promoting the development of the open and export-oriented economy of the country.1.1.1. mission of eximbankthe main mandate of the bank is to implement the state policies in industry, foreign trade, diplomacy, economy and finance to provide policy financial support so as to promote the export of chinese mechanical and electronic products and high- and new-tech products, to support chinese companies with comparative advantages to conduct such cooperation with foreign partners as offshore construction contracts and overseas investment projects, to develop and strengthen relations with foreign countries, and to enhance sino-foreign economic and technological cooperation and exchanges.1.1.2. business scope of eximbankl export credit and import credit;* loans to overseas construction contract and loans to overseas investment project;* chinese government concessional loan;* international guarantee;* onlending loans of foreign governments and financial institutions;* international and domestic settlement and corporate deposits under the loan facilities provided by the bank;* raising funds in domestic and international capital markets and money markets; * international inter-bank loans, organizing or participating in international and domestic syndicated loans;* renminbi inter-bank borrowing and lending and bond repurchases;* foreign exchange dealing and approved risk protection foreign exchange (fx) business for client; * creditworthiness investigation, consultation, appraisal and witness services which are relevant to the banks business;* other business approved or entrusted.1.1.3. 2008 yearly loan quota of eximbankin year 2008 witnessed a fast growth of the eximbanks whole business. the on-and-off sheet loan outstanding combined exceeded rmb 600 billion with total assets valued at rmb 700 billion, credits signed on the balance sheet amounted to rmb 373.4 billion with loan disbursed adding up to rmb 296.135 billion, up by 72.51% and 51.05% respectively over the previous year. these credit was designed to finance the exports of mechanical and electronic products, high and new-tech products, overseas construction contracts and overseas investment projects valued at 102.793 billion in the total as well as the imports of technical equipment and resource based products worth usd 96.082 billion. /annual/2008/2008nb18-29.pdfand in 2009 year the soft loan only reached to 10 billion, and now many projects are under evaluation by the eximbank.1.2. china development bankthe official website of china development bank: /english/index.aspchina development bank (the bank or cdb) is under the direct leadership of the state council. it is dedicated to the mission of strengthening the competitiveness of our country (author remarked: meaning cdb main business is to providing financing for chinese domestic projects) and improving the living standards of our people.cdb has always been a strong supporter of the states macroeconomic policies and has assumed an active role in raising and channeling funds to alleviate the bottleneck restraints to the development of the economy and society. the bank is dedicated to promoting the development of the market through well-planned and balanced financing efforts that support development of the states key projects and construction in the infrastructure sector, basic industries, pillar industries and high-technology industry. in support of the states policies to implement disciplined development and build a harmonious society, the banks funding efforts also go to constrained sectors, including urbanization, smes, agriculture, rural communities and farmers, education, medical and health care and environmental protection. in answer to the call of the state to encourage domestic enterprises to go global, the bank engages in a wide range of international cooperative activities.in support of the states development strategies and objectives, the bank has endeavored to adhere to a market oriented approach, a strategy validated by the banks maintaining and continuously improving robust development capabilities, market innovation capabilities, outstanding internationally-benchmarked market performance and core competitiveness indicators. supporting the states infrastructure development initiatives, basic industries and pillar industries promoting coordination in regional development and restructuring key industries facilitating the development of new rural communities focusing on initiatives that enhance peoples livelihood through supporting sectors that have traditionally been faced with funding constraints steadily promoting international cooperation and supporting the implementation of the states go global strategy prioritizing planning, enhancing financial services and deepening financing cooperation1.2.1. steadily promoting international cooperation and supporting the implementation of the states go global strategyas the largest developing country in the world, china has the will and responsibility to share the story of its success with other developing countries. the bank has continued to maintain its support for a large number of major chinese enterprises in their strategies of expanding their business overseas, inviting foreign investment, and enhancing international cooperation. by the end of 2007, there were 180 international projects supported by the bank with a total loan balance of usd 18.189 billion.in 2007, cdb actively participated in a number of significant international financing projects that received great attention from the government and enterprises. in europe and asia, the bank participated in international syndicated loan projects of russia aluminum industry united company, dubai world, qtel (qatar telecom) and hazak commercial bank. in the asia-pacific region, the bank facilitated the australian iron mine project; the indian telecommunication project and the power plant project in indonesia are progressing soundly. in america, the bank helped china aluminum corporation to acquire the peru copper inc., and established a cooperative relationship with corporacin andina de fomento (caf). in africa, the bank made great progress in cooperation with south africa, kenya, uganda and guinea, and established ongoing relationships with regional multilateral development-oriented financial institutions such as the african development bank, west african development bank and the sino-africa development bank.1.2.2. loans terms of cdbcdb loans are divided into short-term loans (with maturity shorter than a year), medium-term loans (1-5 years) and long-term loans (longer than 5 years). for large infrastructure projects, the maturity period can be extended according to the needs of the relevant industries and projects.the cdb sets interest rates in line with the unified stipulations made by the peoples bank of china. for long-time customers who have maintained sound credit standing, interest rates can be lowered appropriately within the range stipulated by the peoples bank of china.1.3. which bank should be the priority bank for financing your projectsfrom the business scope and character of the eximbank and cdb, we can clearly check out that eximbank put its financing on foreign projects, while cdb focuses on domestic projects. for these foreign companies or employers, it is suggested to apply financing from eximbank as your priority bank for getting financing from, and taking cdb as a second choice.now let spend more time on describe on the principles and general terms of eximbank. and the terms for financing with other chinese banks are almost the same as these of eximbank. although there are many kinds of facilities of financing from eximbank, the widely used is the buyers credit against guarantee from the borrowers banks or government department, usually it is the host countrys ministry of finance. 1.3.1. export buyers creditthe export buyers 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 buyers 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 creditexport buyers 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 the borrower the borrower should be a foreign importer, or the importers 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. the 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 buyers credit operated by china eximbank. commercial contract the commercial contract that seeks for export buyers credit should be examined and approved by the bank, and should satisfy the following requirements: the value of the commercial contract should be more than usd 2 million. the portion of the chinese content of exported goods should be no less than 50