Active Mixed AidData Chinese Aid

China Eximbank provides $68.77 million preferential buyer's credit for Xieng Khuang Airport Upgrading Project

$68.77M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Laos
Country	Lao People's Democratic Republic
Start Date	Aug 18, 2011
End Date	Oct 18, 2033
Duration	8,097 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`85309`

Grant Description

China Eximbank provides $68.77 million preferential buyer's credit for Xieng Khuang Airport Upgrading Project On August 18, 2011, the Ministry of Public Works and Transport of Laos and China CAMC Engineering Co Ltd. signed an $80.9147 commercial (EPC) contract for the Xieng Khuang Airport Upgrading Project.

China Eximbank reportedly agreed (at least in principle) to issue a preferential buyer’s credit (PBC) to finance this contract.

The precise face value of the PBC is unknown, but 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 $68.77 million (85% of $80.9147 million).

📋 Loan / Grant Terms

📅 Maturity19.7202 years

⏳ Grace Period6.5761 years

💹 Interest Rate2.0394%

This project involved the reconstruction and extension of the existing runway, the construction of a new terminal, the installation of a lighting system and navigation system, and the upgrading and reconstruction of auxiliary airport facilities such as the drainage system at Xieng Khuang Airport. The airport is located in the town of Phonsavan within Xieng Khouang Province.

CAMCE was the EPC contractor responsible for implementation. However, AidData has not identified any evidence that this project was ever implemented.

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 Xieng Khouang Airport Upgrading Project.
One of the CAMCE sources refers to this project being financed with a ‘concessional loan’ from China Eximbank. However, the same source describes two other Lao airport projects (Record ID#35756 and Record ID#33794) as being financed with China Eximbank ‘concessional loans’ when in fact we know that they were financed with preferential buyer’s credits.
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 Xieng Khuang Airport Upgrading Projectby 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 Xieng Khuang Airport 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 Xieng Khuang Airport 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

CAMCE-Airport-Achievements
About CAMCE/History of Development/2011
CAMCE SIGNS BUSINESS CONTRACT FOR XIENG KHOUANG AIRPORT EXTENSION PROJECT 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.