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China Eximbank provides RMB 573 million government concessional loan for Dongmarkkhai Water Supply Expansion Project
| Funder | Export-Import Bank of China (China Eximbank) |
|---|---|
| Recipient Organization | Government of Laos |
| Country | Lao People's Democratic Republic |
| Start Date | Aug 05, 2013 |
| End Date | Jan 27, 2032 |
| Duration | 6,749 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 33828 |
Grant Description
China Eximbank provides RMB 573 million government concessional loan for Dongmarkkhai Water Supply Expansion Project On August 5, 2013, China Eximbank and the Government of Laos signed an RMB 573 million ($88 million) government concessional loan (GCL) agreement for the Dongmarkkhai Water Supply Expansion Project.
The proceeds of the GCL were to be used by the borrower to finance a commercial (EPC) contract between the Ministry of Public Works and Transport (MPWT) of Laos and China Yunnan Construction Engineering Group Co., Ltd.
The purpose of this project was to expand and reconstruct the Dongmarkkhai Water Supply System, which is located 10 km north of the capital city of Vientiane in the village of Dongmarkkhai (Dong Mark Khai, ດົງໝາກຄາຍ) within Xaythany District.
The project involved 4 components: (1) New intake at Nam Gum River; (2) Raw water transmission pipelines (2 lines each 18.9 km, DN 1000, reinforced plastic mortar pipes (RPMP); (3) Water treatment plant with the capacity of 100,000 m3 /day; and (4) a clear water transmission pipelines (19.5 km, DN 1200 – DN 500, DCIP) 5) SCADA system.
The raw water source is Nam Gum River.
Raw water is pumped up to the water treatment plant through double raw water transmission pipes with a diameter of 1000 mm.
The total length of each raw water transmission main is 18.8 km each, and the pipe materials are of DCIP for 8.6 km and Reinforced Plastic Mortar Pipe (RPMP) for 10.3 km. China Yunnan Construction Engineering Group Co., Ltd. was the EPC contractor responsible for implementation. Construction started on March 1, 2013 and ended on December 27, 2015.
There are multiple indications that the China Eximbank loan for this project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, the Laotian authorities urgently sought debt relief from China Eximbank.
At that time, the gross reserves of the Bank of Laos stood at only 1.5 months of import cover and credit rating agencies warned of a high default probability.
In 2020, China Eximbank also agreed to reprofile multiple loan agreements that it had previously signed with the Government of Laos (as captured via Record ID#96464).
These debt service payment deferrals lasted for approximately 4-years (2020 and 2023) and provided approximately $1.892 billion of cash flow relief ($1.422 billion in deferred principal payments and $470 million in deferred interest payments). Deferred principal and interest repayments in 2020 were worth $202 million.
Deferred principal and interest payments were worth $426 million in 2021. Deferred principal and interest payments were worth $594 million in 2022. Deferred principal and interest payments were worth $670 million in 2023.
Staff Comments
- This project is also known as Phase 2 of the Dongmarkkhai Water Supply Expansion Project, Dongmakkhay Water Supply Project, the East Mackay Water Treatment Plant Expansion Project, and the Dongmakkhay Water Supply System Expansion Project.
- The Chinese project title is 老挝万象东马凯水处理厂改扩建项目 or 万象东马凯水处理厂改扩建工程项目 or 万象东马凯水处理厂改扩建.
- The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
- According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 19.5233-years in 2013. AidData estimates the maturity of the China Eximbank loan that supported the Dongmarkkhai Water Supply Expansion Project by using this figure. See https://www.dropbox.com/scl/fi/uno1hf2pjg3nfz78h72c6/Private-and-Official-Sector-PRC-Borrowings-and-Borrowing-Terms-of-Lao-PDR-September-2024.xlsx?rlkey=s7eas067aykllu1lik074l5x5&dl=05. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 6.416-years in 2013. AidData estimates the grace period of the China Eximbank loan that supported the Dongmarkkhai Water Supply Expansion Project by using this figure. See https://www.dropbox.com/scl/fi/uno1hf2pjg3nfz78h72c6/Private-and-Official-Sector-PRC-Borrowings-and-Borrowing-Terms-of-Lao-PDR-September-2024.xlsx?rlkey=s7eas067aykllu1lik074l5x5&dl=06. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 2.164% in 2013. AidData estimates the interest rate of the China Eximbank loan that supported the Dongmarkkhai Water Supply Expansion Project by using this figure. See https://www.dropbox.com/scl/fi/uno1hf2pjg3nfz78h72c6/Private-and-Official-Sector-PRC-Borrowings-and-Borrowing-Terms-of-Lao-PDR-September-2024.xlsx?rlkey=s7eas067aykllu1lik074l5x5&dl=0
Sources & References
- Laos
- China hold talks on bilateral ties
- Vientiane Struggles to Produce Enough Water
- MARKET UPDATE FOR ASEAN+3
- Lao People’s Democratic Republic in the new development finance landscape
- Assessment and Prospect of China-Laos Development Cooperation
- THE LAO PEOPLE’S DEMOCRATIC REPUBLIC THE PREPARATORY SURVEY ON VIENTIANE CAPITAL WATER SUPPLY EXPANSION PROJECT FINAL REPORT
- 万象东马凯水处理厂改扩建工程项目
- 刘勇调研四公司老挝万象东马凯水处理厂改扩建项目
- THE PREPARATORY SURVEY ON VIENTIANE CAPITAL WATER SUPPLY EXPANSION PROJECT
- THE PREPARATORY SURVEY ON VIENTIANE CAPITAL WATER SUPPLY EXPANSION PROJECT FINAL REPORT
- V ientiane Capital W ater Supply State Enterprise Annual Report 2015
- Financer les services essentiels des villes du Sud : quelle équation socio-politique? Partage du coût global de long terme du service d’eau potable de Vientiane (Laos)
- Laos-and-china-pledge-to-boost-cooperation-deepen-friendly-ties
- MARKET UPDATE FOR ASEAN+3
- People's Daily: China's Export-Import Bank Laos Loan Project signed Over 55 Billion Yuan Policy-Based Financial Assistance to China-Laos Cooperation
- Vientiane Capital Water Supply State Enterprise Annual Report 2015
- China's Overseas Development Finance
- 人民日报：中国进出口银行老挝贷款项目签约超550亿元 政策性金融助力中老合作
- 东南亚: 中国在老挝的重大投资项目清单（2018年更新） 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.
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Government of Laos
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