Completed Mixed AidData Chinese Aid

China Eximbank provides $39 million preferential buyer’s credit for Northern Province Rural Electrification Project

$39.09M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Jan 01, 2010
End Date	May 30, 2030
Duration	7,454 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`64785`

Grant Description

China Eximbank provides $39 million preferential buyer’s credit for Northern Province Rural Electrification Project In 2010, China Eximbank and the Government of Laos signed a $39,094,086 preferential buyer’s credit (PBC) agreement for the Northern Province Rural Electrification Project.

📋 Loan / Grant Terms

📅 Maturity20.0281 years

⏳ Grace Period7.2533 years

💹 Interest Rate2.0702%

The borrower was expected to use the proceeds of the loan to finance 95% of the cost of a $41,151,670 commercial (EPC) contract between China Gezhouba Group Company Limited (CGGC) and Electricite du Laos (EDL), which was signed on August 12, 2009.

The purpose of the project was to construct a 1,030 km, 22kV power transmission line and a 246 km, 400V low-voltage power transmission line in seven provinces in northern Laos.

Upon completion, the project is expected to benefit 30,000 households in 229 villages across the seven northern provinces. CGGC was the EPC contractor responsible for project implementation. Construction commenced on or around July 24, 2010.

Then, on April 15, 2012, Prime Minister Thongsing and CGGC staff representatives attended a ceremony marking the launch of power supply. The project was officially completed on May 30, 2012.

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

The Chinese project title is 北方农村电网改造项目.
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 20.0281-years in 2010. AidData estimates the maturity of the China Eximbank loan that supported the Northern Province Rural Electrification 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 7.2533-years in 2010. AidData estimates the grace period of the China Eximbank loan that supported the Northern Province Rural Electrification 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 2.0702% in 2010. AidData estimates the interest rate of the China Eximbank loan that supported the Northern Province Rural Electrification 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

Northern Province Rural Electrification Project
Laos
Electrification Project for the Northern Rural Area
Laos
Electrification Project in rural areas of northern Laos completed ahead of schedule
CGGC wins Hydropower Station Project and Northern Rural Electrification Project in Laos
Electrification Project for the Northern Rural Area
Laos, 《人民网》：穿越老挝丛林共建“一带一路”
Electrification Project for the Northern Rural Area
Laos
驻老挝大使馆临时代办吴志武出席老挝北方农村电气化工程项目启用仪式
中国葛洲坝集团股份公司老挝北方农村电气化改造项目即将进入现场实施阶段
东南亚: 中国在老挝的重大投资项目清单（2018年更新）
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.