Completed Mixed AidData Chinese Aid

China Eximbank provides $115.9 million loan for 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8)

$115.9M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Jan 01, 2015
End Date	Sep 18, 2026
Duration	4,278 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`63447`

Grant Description

China Eximbank provides $115.9 million loan for 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8) In 2015, China Eximbank issued a $115.9 million loan to the Government of Laos for the 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8).

📋 Loan / Grant Terms

📅 Maturity19.994 years

⏳ Grace Period6.9585 years

💹 Interest Rate2%

The borrower was expected to use loan proceeds to finance 95% of the cost of a $122 million engineering, procurement and construction (EPC) contract that the Government of Laos and Dongfang Electric Group (DEC) and Electricite du Laos (EDL) signed in 2013.

The purpose of the project was to install two additional power generation units (40MW each) — known as Unit 7 and Unit 8 —at the Nam Ngum 1 Hydropower Plant (HPP) in Keo-Oudom district within Vientiane province. The locational coordinates of the project site are 18.531068°N 102.547577°E. DEC was the EPC contractor responsible for implementation.

However, it appears to have hired Sinohydro Corporation Engineering Bureau 15 Co. Ltd. as a subcontractor. Construction commenced in May 2015.

The first power generation unit (Unit 7) and second power generation unit (Unit 8) successfully passed a 72-hour trial operation on April 10, 2018. The project was completed and the power plant was officially inaugurated on May 28, 2018.

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 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.

Additionally, according to a report published by the World Bank in April 2022, ‘[t]he energy sector, mostly represented by Électricité du Laos (EDL), accounted for over 30 percent of total PPG debt in 2021. […] EDL’s debt service obligations [were] still unsustainable [at the time], with future debt service accounting for about two fifths of EDL’s total operating revenue.’ In September 2020, a Chinese state-owned enterprise purchased a major public infrastructure asset in Laos—a large part of the country’s electricity transmission grid—from EDL as part of an apparent debt-for-equity swap.

China Southern Power Grid Co. and EDL established a joint venture known as Électricité du Laos Transmission Company Limited (EDLT).

China Southern Power Grid Co. purchased a 90% ownership stake in EDLT in exchange for a $600 million fee (equity infusion).

Then, in March 2021, EDLT signed a 25-year concession agreement, which made it responsible for management of the country’s high-voltage transmission network above 230 kilovolts.

Independent observers suggested at the time that EDL would likely use the $600 million upfront payment from China Southern Power Grid Co. to service its outstanding debts to Chinese creditors, although this has not been independently confirmed.

📋 Staff Comments

This project is also known as the Nam Ngum 1 Expansion HPP (Dongfang) Project, Phase V of the Nam Ngum 1 Hydropower Project, the South Russia 1 Hydropower Expansion Project, NNG1 HPP, and the Nam Ngum-1 Hydropower Plant (HPP) Expansion Project Unit 7-8 (80MW). The Chinese project title is 老挝南俄1 or 南俄1水电站扩机项目 or 老挝南俄1水电站扩机项目 or 老挝南俄1（Nam Ngum 1)项目.
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.
The borrower of the loan is not explicitly identified in any of the underlying sources that underpin this project record. However, EDL-Generation Company Limited (EDL-Gen) — a subsidiary of Électricité du Laos (EDL) — is identified as the project owner, so AidData assumes that the Government of Laos (or an entity owned by the Government of Laos) is the borrower.
Électricité du Laos (EDL) is the state corporation of Laos that owns and operates the country's electricity generation, electricity transmission and electricity distribution assets. The company also manages the import and export of electricity from the national electricity grid of the country. EDL-Generation Company Limited (EDL-Gen) was incorporated in 2010 and operates as a subsidiary of EDL.
One source identifies the commercial (EPC) contract cost as $177.07 million. This issue warrants further investigation.
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 19.994-years in 2015. AidData estimates the maturity of the China Eximbank loan that supported the 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8) 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=07. 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 6.9585-years in 2015. AidData estimates the grace period of the China Eximbank loan that supported the 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8) 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=08. 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% in 2015. AidData estimates the interest rate of the China Eximbank loan that supported the 80MW Nam Ngum 1 Hydropower Expansion Project (Units 7 & 8) 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

EDL-Gen attend Inauguration Ceremony for Nam Ngum–1 HPP Expansion project Unit 7- 8 (80MW) Organized by: EDL
NAM NGUM 1 HYDROPOWER PLANT
Nam Ngum 1 hydropower project unit 7-8 officially launched
Minutes of the Annual General Shareholders' Meeting for the Year 2015
东方电气承建的老挝南俄1水电站扩机项目竣工
老挝南俄1水电站扩机项目进入全新作业阶段
The Management member of EDL-Gen attend the inauguration ceremony for Nam Ngum-1 Hydropower Plant (HPP) Expansion project Unit 7-8 (80MW)
PORTFOLIO ARCHIVE
NAM MANG 1
Invitation to the Annual General Shareholders' Meeting for the Year 2017
我局中标老挝南俄1水电站扩机项目
一带一路丨老挝南俄1水电站扩机项目竣工
老挝南俄1水电站扩机项目进入全新作业阶段
Credit crunch: Chinese infrastructure lending and Lao sovereign debt
政府説明資料
东方电气承建的老挝南俄1水电站扩机项目竣工
王其辉参赞参加南俄1水电站扩机项目竣工典礼
China Overseas Development Finance, ການກໍ່ສ້າງເຂື່ອນໄຟຟ້ານ້ຳງື່ມ 1 ເປັນໜຶ່ງໃນໂຄງການທີ່ມີສ່ວນຮ່ວມຈາກບັນດາປະເທດຕ່າງໆ ແລະ ການກໍ່ສ້າງຍາວນານທີ່ສຸດ ຂອງ ສປປ ລາວ
Livelihood impacts of hydropower projects on downstream communities in central Laos and mitigation measures 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.