Completed Mixed AidData Chinese Aid

China Eximbank provides $21.25 million preferential buyer’s credit for Vientiane Flood Drainage Channel and Pump Station Project

$21.25M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Jan 01, 2012
End Date	Sep 11, 2029
Duration	6,463 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`64718`

Grant Description

China Eximbank provides $21.25 million preferential buyer’s credit for Vientiane Flood Drainage Channel and Pump Station Project In 2012, China Eximbank and the Government of Laos signed a preferential buyer’s credit (PBC) agreement worth approximately $21.25 million for the Vientiane Flood Drainage Channel and Pump Station Project.

📋 Loan / Grant Terms

📅 Maturity20.2082 years

⏳ Grace Period6.3382 years

💹 Interest Rate2.3636%

The purpose of the project was to construct flood drainage channels (measuring 2.3 km in length and 23 meters in width) — including footpaths on both sides — and a pump station (equipped with five 4.5 m3/s pumps in five villages within Sisattanak district: Kaoyord, Phiavat, Thatkhao, Beungkayong and Vat Nark.

The ultimate purpose of the project was to allow for a better outflow of water from the city of Vientiane; the pumps that were to be installed were capable of handling at least 21.5 cubic meters per second, or an average of 77,400 cubic meters per hour.

The project was also designed to support the 9th ASEM Summit in Laos by increasing the flood control capacity of Don Chan Island—the major activity area of the Summit — during rainy season. China CAMC Engineering Co Ltd. was the EPC contractor responsible for implementation. The project’s implementation start date is unknown.

However, it is known that Prime Minister Thongsing Thammavong conducted an on-site project inspection on July 27, 2012 and Vice Prime Minister Thongloun Sisoulith conducted an on-site project inspection on August 5, 2012. The project was officially completed and handed over to the local authorities on March 21, 2013.

Deputy Minister of Planning and Investment Khamlien Pholsena, Deputy Minister of Public Works and Transport Lattanamany Khounnivong, Vice Mayor of Vientiane Mr. Keophilavanh Aphaylath, President of CAMCE Luo Yan attended the project handover ceremony.

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 Vientiane City Floodway and Pumping Station Project. The Chinese project title 万象市东珍排洪渠及泵站项目.
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.
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 20.2082-years in 2012. AidData estimates the maturity of the China Eximbank loan that supported the Vientiane Flood Drainage Channel and Pump Station 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 6.3382-years in 2012. AidData estimates the grace period of the China Eximbank loan that supported the Vientiane Flood Drainage Channel and Pump Station 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 2.3636% in 2012. AidData estimates the interest rate of the China Eximbank loan that supported the Vientiane Flood Drainage Channel and Pump Station 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. The proceeds of the PBC were to be used by the borrower to finance a $25 million commercial (EPC) contract with China CAMC Engineering Co Ltd. 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 $21.25 million (85% of $25 million).

📚 Sources & References

老挝万象排洪渠泵站项目（交钥匙工程）
CAMCE HONORED WITH 3RD LABOR MEDAL AND 2ND DEVELOPMENT MEDAL FROM LAO PDR
References-in-Water-Projects
CHAIRMAN LUO YAN INTERVIEWED BY CCTV
XNA
Weekly Political and Economic News of the Lao PDR
China's Overseas Development Finance
CHINA CAMC ENGINEERING CO.,LTD. - History of Development - 2014
万象市东珍排洪渠及泵站项目举行竣工仪式
万象市东珍排洪渠及泵站项目举行竣工仪式 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.