Completed Mixed AidData Chinese Aid

China Eximbank provides $600 million preferential buyer’s credit for 240MW Nam Ngum 4 Hydropower Plant Project (Linked to Record ID#105893)

$600K USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Lao Ministry of Finance
Country	Lao People's Democratic Republic
Start Date	Sep 08, 2016
End Date	May 24, 2027
Duration	3,910 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`63452`

Grant Description

China Eximbank provides $600 million preferential buyer’s credit for 240MW Nam Ngum 4 Hydropower Plant Project On September 8, 2016, during Premier Li Keqiang's visit to Laos, China Eximbank and the Lao Ministry of Finance signed a $600 million preferential buyer’s credit (PBC) agreement for the 240MW Nam Ngum 4 (NG4) Hydropower Project (as captured via Record ID#63452). Électricité du Laos (EDL) — the state corporation of Laos that owns and operates the country's electricity generation, electricity transmission and electricity distribution assets — became the effective borrower of the loan.

📋 Loan / Grant Terms

📅 Maturity18.1764 years

⏳ Grace Period5.05 years

💹 Interest Rate3.1298%

The borrower was expected to use the loan proceeds to finance 85% of the cost of a $706 million EPC contract between EDL and China National Heavy Machinery Corporation (CHMC), which was signed in late 2015.

Then, on June 23, 2017, the Shanghai Branch of MetroBank, Maybank, Bank SinoPac, E.SUN Commercial Bank of Taiwan, and Sinomach Finance Co., Ltd. (国机财务有限责任公司) signed a $100 million syndicated loan agreement with EDL for the 240MW Nam Ngum 4 Hydropower Plant Project (as captured via Record ID#105893).

📋 Loan / Grant Terms

💰 Loan Amountare unknown

Nor is it known how the borrower was expected to use the loan proceeds.

The purpose of the project is to construct the 240MW Nam Ngum 4 (南俄肆) hydropower plant with three 80MW turbines (power generation units) and a 74-meter high dam with water storage capacity of 107,400,000 cubic meters. The project also involves the construction of a 17 km tunnel.

The project site is located approximately 10 km west of a proposed slaughterhouse site near the confluence on Nam Kho River and Nam Ngum River in Paek District and Xiangkhoang Province. Its precise locational coordinates are as follows: Latitude: 19°5'2.04" and Longitude: 102°52'46.56”. CHMC is the EPC contractor responsible for implementation.

It appears to have hired VLV Xoumphonphakdy (a Lao company) as a subcontractor. Construction began on January 25, 2018. River closure occurred on October 15, 2019.

Then, on February 15, 2021, a 200 ton bridge crane at the Nam Ngum 4 Hydropower Plant successfully completed a load test. As of May 2022, the project had achieved a 90% completion rate. Then, on February 1, 2024, dam impoundment took place. The concrete lining of the diversion tunnel took place on March 10, 2024.

Power generation unit #1 began trial operations on July 6, 2014. Power generation unit #2 began trial operations on July 13, 2024. Power generation unit #3 began trial operations on July 28, 2024. The power plant's commissioning was originally scheduled for July 2024.

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 the Nam Ngum 4 Hydropower Project and the NG4 Project.
The Chinese project title is 南俄4水电站项目 or 南俄肆.
In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies the face value of the China Eximbank loan that supported this project as $322 million. However, official sources indicate that the face value of the loan was equivalent to $600 million, or 85% of the cost of the EPC contract.
In 2017, the World Bank reported that EDL was seeking to divest its ownership in NG4 and NG3 (captured via Record ID#63450) in order to reduce its indebtedness. These divestments were expected to provide substantial financial relief to EDL as its NG3 and NG4 project debts amounted over $1 billion by 2017. However, it is unclear if the China Eximbank project debt for NG4 has been transferred from EDL to a different entity. This issue merits further investigation.
It is unclear if EDL co-signed the PBC agreement or an on-lending agreement with the Lao Ministry of Finance. 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 18.1764-years in 2016. AidData estimates the maturity of the China Eximbank loan that supported the 240MW Nam Ngum 4 Hydropower Plant 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=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 5.05-years in 2016. AidData estimates the grace period of the China Eximbank loan that supported the 240MW Nam Ngum 4 Hydropower Plant 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=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 3.1298% in 2016. AidData estimates the interest rate of the China Eximbank loan that supported the 240MW Nam Ngum 4 Hydropower Plant 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

SINOMACH TODAY
SINOMACH TODAY VOL 43
Reconnecting Asia Nam Ngum 4 Hydroelectric Power Project
Laos
China ink loan pact for dam
Laos
China ink Nam Ngum 4 Dam loan agreement
Sinomach - New hydropower project starts construction in Laos
Loan Agreement of Laos Nam Ngum 4 Hydropower Project, formally signed
老挝南俄4水电站项目贷款协议正式签署
Credit crunch: Chinese infrastructure lending and Lao sovereign debt
TF Borrower Briefing Published 22 September 2016
Power Grid Improvement (PGI) Project
CHMC Laos Nam Ngum 4 Hydropower Station Project Closed the River Successfully
CHMC SIGNED EPC CONTRACT FOR LAO NN4 HYDROPOWER PROJECT
The Bridge Crane in the Main Plant of CHMC Laos Nam Ngum 4 Hydropower Station，Completed the Load Test Succes
驻老挝大使王文天出席出席南俄4水电站开工仪式
金融助力中老两国重要领域合作
对外投资合作国别（地区）指南老挝（2017年版）
Loan Agreement of Laos Nam Ngum 4 Hydropower Project, formally signed
对外投资合作国别（地区）指南老挝（2018年版）
Nam Ngum 4 Hydropower Project 90% Complete
Laos mega hydropower US$760 million project Nam Ngum 4 now 90% complete
INITIAL ENVIRONMENTAL EXAMINATION Xieng Khouang Slaughterhouse Subproject
Laos
China ink Nam Ngum 4 dam loan agreement
The Laos Nam Ngum 4 Hydropower Project
Contracted by CHMC
Officially Began Its Construction
The rotor of Unit 2 of Nam Ngai Hydropower Station No. 4 in Laos was successfully hoisted
The 1# main inlet valve of China Heavy Machinery's Laos Nam Russia 4 Hydropower Station Project passed the acceptance inspection
The main transformer and other equipment of the Laos Nam Ngai 4 Hydropower Station project passed the owner's inspection and acceptance
China Overseas Development Finance
老挝南俄四水电站实现“一月三投”
CHMC Laos Nam Ngum 4 Hydropower Station Successfully Impounded the Sluice to Store Water
The Lining of the Diversion Tunnel of Laos Nam Ngum 4 Hydropower Station，Has Been Completed
中国进出口银行对中国重机老挝南俄4水电站项目开展贷后检查
中企海外项目周报（2024.6.8-2024.6.14）
我行作为牵头行成功签约“一带一路”项目老挝南俄肆水电站银团贷款
国机财务
THE LAO government and China have signed a $600-million (Bt21 billion) loan agreement for the Nam Ngum 4 hydropower project in Xieng Khuang Province.
Private and Official Sector PRC Borrowings and Borrowing Terms of Lao PDR -- September 2024
Villagers Displaced by Laos’ Nam Ngum 4 Dam Say Compensation is not Enough 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.