Completed Mixed AidData Chinese Aid

China Eximbank provides $32.4 million preferential buyer’s credit for Don Khong-Mekong Bridge Construction Project

$32.41M 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 01, 2028
Duration	6,209 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`64725`

Grant Description

China Eximbank provides $32.4 million preferential buyer’s credit for Don Khong-Mekong Bridge Construction Project In 2011, China Eximbank and the Government of Laos signed a $32.414 million preferential buyer’s credit (PBC) agreement for the Don Khong-Mekong Bridge Construction Project.

📋 Loan / Grant Terms

📅 Maturity19.7202 years

⏳ Grace Period6.5761 years

💹 Interest Rate2.0394%

The borrower was expected to use to the loan proceeds to finance 95% of the $34.12 million cost of a commercial (EPC) contract between the Government of Laos and Hunan Provincial Communications Planning Survey & Design Institute.

The purpose of the project was to construct a 718 meters long bridge over the Mekong River to Don Khong (ດອນໂຂງ) Island and a 4.2-kilometer road that connects the bridge to National Route 13.

Hunan Provincial Communications Planning Survey & Design Institute was the EPC contractor responsible for implementation. Construction began on November 28, 2011. The project was officially completed on November 23, 2014 and the bridge was opened to traffic on the same day.

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 DoneKong-Mekong Bridge Construction Project, the Donekong Island Mekong River Bridge Project, the Don Khong Bridge Project, and the Don Khong Island Bridge Project. The Chinese project title is 农良-塔銮桥道路建设项目 or 东空岛跨湄公河大桥.
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 19.7202-years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the Don Khong-Mekong Bridge Construction 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 6.5761-years in 2011. AidData estimates the grace period of the China Eximbank loan that supported the Don Khong-Mekong Bridge Construction 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 2.0394% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported the Don Khong-Mekong Bridge Construction 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

[资讯] 老挝占巴塞省东孔岛湄公河大桥通车(13P)
老挝占巴塞省东孔岛跨湄公河大桥举行竣工通车仪式
我优买资金支持的老挝占巴塞省东孔岛跨湄公河大桥举行竣工通车仪式
Governing aid from China through embedded informality: Institutional response to Chinese development aid in Laos
我优买资金支持的老挝占巴塞省东孔岛夸湄公河大桥举行竣工通车仪式
Governing aid from China through embedded informality: Institutional response to Chinese development aid in Laos
China's Overseas Development Finance
中国进出口银行行长李若谷访问老挝
东南亚: 中国在老挝的重大投资项目清单（2018年更新） 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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