Completed Mixed AidData Chinese Aid

China Eximbank provides $32 million preferential buyer's credit for Wattay International Airport Upgrading Project

$32.03M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Jan 01, 2011
End Date	Jan 19, 2031
Duration	7,323 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`35756`

Grant Description

China Eximbank provides $32 million preferential buyer's credit for Wattay International Airport Upgrading Project In 2011, China Eximbank and the Government of Laos signed a preferential buyer’s credit (PBC) agreement worth approximately $32.028 million for the Wattay International Airport Upgrading Project.

📋 Loan / Grant Terms

📅 Maturity19.7202 years

⏳ Grace Period6.5761 years

💹 Interest Rate2.0394%

The proceeds of the PBC were to be used by the borrower to partially finance a $37.68 million commercial (EPC) contract between the Ministry of Public Works and Transport of Laos and China CAMC Engineering Co Ltd. (CAMCE), which was signed on July 13, 2011.

The project involved an expansion of the existing apron and runway at the Wattay International Airport, which is located 3 km outside the city of Vientiane.

It also involved improvements to the navigation lights system and drainage systems as well as the construction of nearby roads and an office building for the Civil Aviation Authority and Directorate of Airport Management. The project was meant to be completed in advance of the 9th ASEM Summit. CAMCE was the EPC contractor responsible for implementation.

Construction started in December 2011 and ended on May 21, 2012. A completion ceremony was held on October 9, 2012. A project warranty period expired and a final acceptance certificate (FAC) was issued on November 11, 2013. China Eximbank conducted an on-site project inspection on March 22, 2014.

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

The Chinese project title is 席万象瓦岱国际机场改扩建项目.
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 19.7202-years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the Wattay International Airport Upgrading 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=03. 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 6.5761-years in 2011. AidData estimates the grace period of the China Eximbank loan that supported the Wattay International Airport Upgrading 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=04. 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 2.0394% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported the Wattay International Airport Upgrading 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. The precise face value of the PBC is unknown. However, since China Eximbank PBCs typically finance 85% of the total cost of a commercial (EPC) contract, AidData assumes that the face value of the PBC was $32.028 million (85% of $37.68 million). This issue warrants further investigation.

📚 Sources & References

WATTAY INTERNATIONAL AIRPORT UPGRADING PROJECT IN LAOS
老挝的机场中国人建造
瓦岱國際機場升級完成
老挝瓦岱机场扩建工程正在进行
中工国际签下老挝7.6亿元合同
CAMCE-Airport-Achievements
中工国际举行老挝万象瓦岱国际机场扩建项目竣工典礼
中工国际举行老挝万象瓦岱国际机场扩建项目2号和3号机坪工程移交仪式
CHINA EXIM BANK INSPECTED CAMCE WATTAY INTERNATIONAL AIRPORT UPGRADING PROJECT
China's Overseas Development Finance
Wattay International Airport Upgrading Project in Laos
布建国大使出席万象瓦岱国际机场改扩建项目交接仪式
利用我优买实施的万象瓦岱国际机场改扩建项目举行交接仪式
Wattay International Airport
Vientiane
Laos
China Overseas Development Finance 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.

All Grantees

Government of Laos

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