CARACAS – President Hugo Chavez said his government has received a first installment of a $20 billion Chinese loan that Venezuela will repay with oil.
Chavez said the China Development Bank deposited on an unspecified date “close to $4 billion that is part of the first tranche of a large-volume, long-term loan” to be extended to Venezuela.
Those funds will be used to “revive and accelerate a series of (public) works projects and start other ones,” the AVN state-run news agency quoted the president as saying.
The Chinese government confirmed in April that it signed seven cooperation accords with Venezuela, including “a framework agreement” on financing under which the CDB will provide Venezuela a $10 billion loan and an additional credit worth roughly 70 billion yuan ($10.4 billion).
The law approving that loan agreement was published in the official gazette on Sept. 16, AVN reported Friday.
Venezuela will pay China back with “no less than 200,000 barrels per day of crude in 2010; no less than 250,000 bpd in 2011; and no less than 300,000 bpd in 2012,” AVN said, citing the law approving the financing deal.
“The maximum term for each line of credit will be 10 years, starting from the date the accord was signed. The interest rate will be determined by agreement between the lender and borrower on the basis of direct negotiations and market principles,” AVN reported.
In announcing the loan deal on April 17, Chavez noted that Venezuela already is sending China close to 500,000 bpd and plans to double that figure in the coming years.
“All the oil China may need to consolidate itself as a great power is here” in Venezuela, the president said then.
He also stressed at that time that the financial conditions of the Chinese loan “have nothing to do with the unfair” terms imposed by multilateral lending agencies such as the International Monetary Fund.
The Venezuelan opposition has harshly criticized the loan agreement with China as unconstitutional, claiming that agreeing to pay back the credit with oil – the country’s leading export product – could jeopardize the country’s national wealth.
Venezuela is a founding member of the Organization of the Petroleum Exporting Countries, the world’s fifth-leading crude exporter and one of the biggest suppliers of oil to the United States, the destination for roughly half of the South American country’s daily production of 2.9 million barrels.