Completed Mixed AidData Chinese Aid

China Eximbank provides $86.9 million preferential buyer's credit for Phongsaly-Lantouy International Checkpoint Section of National Road No. 1A Upgrading Project

$86.93M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Jan 05, 2011
End Date	Oct 12, 2033
Duration	8,316 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`64754`

Grant Description

China Eximbank provides $86.9 million preferential buyer's credit for Phongsaly-Lantouy International Checkpoint Section of National Road No. 1A Upgrading Project On January 5, 2011, Guangdong No.3 Water Resources and Hydropower Engineering Board (广东省水利水电第三工程局) and the Ministry of Public Works and Transport of Laos signed a $91,590,903 engineering, procurement, and construction (EPC) contract for the Phongsaly-Lantouy International Checkpoint Section of the National Road No. 1A Upgrading Project.

China Eximbank subsequently issued a $86,925,000 preferential buyer’s credit (PBC) to the Government of Laos in support of this project.

📋 Loan / Grant Terms

📅 Maturity19.7202 years

⏳ Grace Period6.5761 years

💹 Interest Rate2.0394%

The borrower was expected to use the loan proceeds to finance 95% of the cost of the EPC contract.

The purpose of the project was to renovate a 141.7 km section of National Road No. 1A that runs from the town of Boun Neua (Bounneua orເມືອງບຸນເໜືອ) in Phongsaly Province to Lantouy International Checkpoint at the Laos-China border. Guangdong No.3 Water Resources and Hydropower Engineering Board was the EPC contractor responsible for implementation.

Construction began on November 30, 2013 and the project was originally expected to reach completion on May 30, 2017. As of March 2014, 26.2% of the earth and stone works were completed, and 2.7% of the drainage works were completed. As of September 2014, the project had achieved a 40% completion rate.

This project was ultimately completed, but its precise implementation end date is unknown.

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 National Road No. 1A Renovation Project. The Chinese project title is 老挝丰沙里省本怒至兰堆1A道路建设修整项目 or 丰沙里省国道扩建工程 or 老挝1A道路改造项目.
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 19.7202-years in 2011. AidData estimates the maturity of the China Eximbank loan that supported the Phongsaly-Lantouy International Checkpoint Section of National Road No. 1A Upgrading 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 Phongsaly-Lantouy International Checkpoint Section of National Road No. 1A Upgrading 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 Phongsaly-Lantouy International Checkpoint Section of National Road No. 1A Upgrading 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

广东水电三局签署老挝1A道路改造项目商务合同
老挝公共工程和运输部规划四大重点发展领域
丰沙里省国道扩建工程有望提前18个月完工
广东水电三局深耕老挝化解万象“长安街”项目危机树品牌
老挝国务院总理视察广东建工集团省水电三局1A道路工程
LAO PDR Long Term Transport Development Plan
ROAD DEVELOPMENT AND ROAD CONSTRUCTION IN LAOS
Reconnecting Asia Phongsaly-Yunnan Road Project
China’s Belt and Road Initiative (BRI) and Southeast Asia
我优买资金支持的老挝丰沙里省本怒至兰堆1A道路建设修整项目举行开工仪式
China's Overseas Development Finance
驻老挝大使布建国出席1A道路改造项目商务合同签约仪式 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.

All Grantees

Government of Laos

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