Completed Development AidData Chinese Aid

China Eximbank provides $198.8 million government concessional loan for 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines Project

$198.83M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Lao Ministry of Finance
Country	Lao People's Democratic Republic
Start Date	May 01, 2016
End Date	Oct 29, 2026
Duration	3,833 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`63775`

Grant Description

China Eximbank provides $198.8 million government concessional loan for 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines Project In May 2016, China Eximbank and the Ministry of Finance of Laos signed a $198,827,000 government concessional loan (GCL) agreement for the 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines Project.

📋 Loan / Grant Terms

📅 Maturity18.1764 years

⏳ Grace Period5.05 years

💹 Interest Rate3.1298%

The proceeds of the loan were to be used by the borrower to finance a $198,827,000 commercial (EPC) contract between Électricité du Laos (EDL) — the state corporation of Laos that owns and operates the country's electricity generation, electricity transmission and electricity distribution assets — and NORINCO.

The purpose of the 230kv Thavieng S/S-Laoksao S/S Transmission Line, with a total length of 220 km, was to transmit electricity from Thavieng Substation in XiengKhuang Province to Laksao Substation in Bolikhamxai Province and further to connect the Central 1 with the Central 2 regional power networks as well as to connect other possible local networks in Laos, and also to transmit power to Nakadok Mining area.

The purpose of the 115kv Nam Phay HPP-Thongkoun2 S/S Transmission Line, located in Xaysomboun Province, was to transmit the electric power generated by Nam Phay Hydropower Plant to Thongkoun 2 Substation, constituting trunk line system linked within Central 1 Regional Power Network that secures power stability with improving quality of electricity.

This transmission line is of double circuit, and the total length is 45km.

The construction of the line sought to ensure that power generated by Nam Phay Hydropower Station, which is jointly invested by NORINCO International and Electricité du Laos, would be reliably delivered to the power grid of Laos and realize the expected investment returns. NORINCO was the EPC contractor responsible for implementation.

On June 7, 2017, Minister of Energy and Mines of Laos Dr. Khammany Inthirath visited the 230kV Thavieng-Laksao Transmission Line project site. A project completion ceremony took place on September 14, 2018.

There are some indications that the China Eximbank loan for the 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines Project may have financially underperformed vis-a-vis the original expectations of the lender.

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.’ Additionally, 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 230kV Thavieng-Laksao Transmission Line Project or the 230kV Thavieng-Laksao S/S And 115kV Nam Phay HPP-Thongkoun2 S/S Transmission Line Project. It is sometimes transliterated from Chinese as 230 KV Power Transmission and Transformation from Tamian to Lasao Project. The Chinese project title is 230千伏塔维扬－拉克绍及115千伏南湃－通昆输变电线路项目 or 老挝２３０ｋＶ＆１１５ｋＶ输变电线路 or 老挝230kV输变电项目 or 230kV Thavieng-Laksao输变电项目.
Per China Eximbank's policy of allowing borrowers to use GCLs to finance the full cost of EPC contracts, AidData assumes the face value of the GCL was $198,827,000. The GCL was almost certainly denominated in RMB, but AidData was not able to identify the face value of the GCL or the EPC contract in RMB. This issue merits 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 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines 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 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 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines 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 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 230KV Thavieng S/S-Laksao S/S and 115 KV Nam Phay HPP-Thongkoun2 S/S Transmission Lines 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

中国企业在老输变电线路项目竣工
Export - Import Bank of China Introduction to “Two Concessional” Loan
中国企业承建老挝输变电线路项目竣工
Belt and road power line project completed in Laos
中企承建的老挝输变电线路项目竣工
Belt And Road Power Line Project Completed In Laos.
老挝“一带一路”输电线路项目竣工
Chinese company completes transmission lines project in Laos
Chinese company completes transmission lines project in Laos
北方国际老挝２３０ｋＶ＆１１５ｋＶ输变电线路竣工
中国企业承建老挝输变电线路项目竣工, - Minister of Energy and Mines of Laos Visited 230kV Thavieng-Laksao Transmission Line Project -, - President of NORINCO International Yuan Jun Attended the Completion Ceremony of Laos 230kV Thavieng-Laksao S/S And 115kV Nam Phay HPP-Thongkoun2 S/S Transmission Line Project -, - A Delegation Led by the Vice-President of Lao-China Cooperation Commission Paid an Inspection Visit to 230 kV Thavieng-Laksao Transformation Line Project in Laos -, - A Delegation Led by the Vice-President of Lao-China Cooperation Commission Paid an Inspection Visit to 230 kV Thavieng-Laksao Transformation Line Project in Laos -
Chinese company completes transmission lines project in Laos
BU_PITCH_ENGLISH_2019-clean5.xlsx
驻老挝大使王文天参加输变电线路项目竣工典礼
China's Global Energy Finance: Laos
老挝的道路电力线项目已经完成
中国企业承建老挝输变电线路项目竣工
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.