What changed
Exim Bank signed a Line of Credit agreement with the Government of Democratic Republic of Congo on August 5, 2010, effective November 19, 2010, for USD 42 million. The credit is specifically for financing the Kakobola Hydroelectric Power Project, requiring at least 85% of goods and services (including consultancy) to be sourced from India. The last date for opening LCs and disbursement is 48 months from scheduled completion for project exports, or 72 months from the credit agreement execution date for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply eligible goods and services for the Congo hydro project, with a mandatory 85% Indian content. AD Category-I banks must facilitate related trade finance, ensure GR/SDF form compliance, and handle any agency commission remittances only after full contract value realization. This opens a structured export opportunity backed by Exim Bank's sovereign credit.
What you must do
- Inform exporter clients about the LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Allow agency commission remittances only after full contract value realization, using exporter's own resources or EEFC balances.
- Verify that at least 85% of contract value is sourced from India before processing transactions.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of goods and consultancy services for the Kakobola Hydroelectric Power Project, Exim Bank as the credit provider
What is the minimum Indian content required under this Line of Credit?
At least 85% of the contract price must consist of goods and services (including consultancy) supplied from India. The remaining 15% can be procured from outside India for the eligible contract.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC itself. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange, but only after full realization of the contract value.
What are the key timelines for this LOC?
The credit agreement is effective from November 19, 2010. For project exports, LCs must be opened and disbursements completed within 48 months from the scheduled completion date. For supply contracts, the deadline is 72 months from the execution date (August 4, 2016).