CDB contributes $770 million to $1.3 billion syndicated buyer’s credit loan for Phase 2 of Nam Ou Hydropower Project (Linked to Record ID#73301, 73303, 98809)

Project narrative

On August 31, 2015, Powerchina Resources Ltd. and the Government of Laos signed a Franchise Agreement and Power Purchase Agreement for Phase 2 of the Nam Ou Hydropower Project in Beijing. Then, in September 2015, Powerchina Resources Ltd. created a wholly-owned subsidiary and special purpose vehicle called the Nam Ou Power Co., Ltd. in order to finance, develop, implement, and operate Phase 2 of the Nam Ou Hydropower Project on a build-operate-transfer (BOT) basis. The total cost of Phase 2 was $1.644 billion and it was financed with a mix of debt and equity. Then, on September 8, 2016, Nam Ou Power Co., Ltd. signed a $1.3 billion syndicated buyer’s credit loan agreement with China Development Bank, China Eximbank, and China Construction Bank. CDB contributed $770 million (as captured via Record ID#67486) and China Eximbank and China Construction Bank jointly contributed $530 million (as captured via Record ID#73301 and Record ID#98809). The loan agreement was modified through a supplementary agreement that was signed by the parties in January 2017. The loan carries a 20.38-year maturity (final maturity date: January 20, 2037). Its other borrowing terms are unknown. However, it is known that the borrower (Nam Ou Power Co., Ltd.) was expected to use the proceeds of the loan to finance a commercial contract with Power Construction Corporation of China (POWERCHINA), which was signed in June 2012. It is also known that Nam Ou Power Co., Ltd. purchased buyer’s credit insurance from Sinosure and Powerchina Resources Ltd. provided a partial repayment guarantee. Additionally, Powerchina Resources Ltd. made a $340 million equity contribution to Phase 2 of the Nam Ou Hydropower Project (as captured via Record ID#73303). The purpose of Phase 2 was to construct four hydropower stations — the 180MW Nam Ou 1 hydropower station, the 210MW Nam Ou 3 hydropower station, the 132MW Nam Ou 4 hydropower station, and 210MW Nam Ou 7 hydropower station — on the Nam Ou River in Luangprabang Province and Phongsaly Province. Upon completion, Nam Ou 1 was expected to have a total reservoir capacity of 1.18 × 108 million cubic meters and generate 180MW from four sets of turbines and generators. Nam Ou 3 was expected to have a total reservoir capacity of 218 million cubic meters and generate 210MW from three turbo-generator sets. Nam Ou 4 was expected to have a total reservoir capacity of 142 million m3 and produce electricity from three turbo-generators with a total capacity of 132MW. Nam Ou 7 was expected to include two turbo-generators sets with a total capacity of 210MW. Under the terms of a concession agreement with the Government of Laos, Powerchina Resources Ltd. agreed to transfer the Phase 2 of the project to the Government of Laos after 29 years of operation. The precise locational coordinates of Nam Ou 1 are 20.0883°N 102.265379°E. The precise locational coordinates of Nam Ou 3 are 20.695251°N 102.665404°E. The precise locational coordinates of Nam Ou 4 are 21.120153°N 102.494173°E. The precise locational coordinates of Nam Ou 7 are 21.120153°N 102.494173°E. The project's second phase was subjected to an environmental and social impact assessment (ESIA), which laid the groundwork for the project company taking responsibility for the relocation of displaced villagers. An environmental management process featuring PDCA (plan-do-check-act) was established. Efforts were also undertaken to limit fishing to exert less impact on the fish species in the Nam Ou river. PowerChina Kunming Engineering Corp Ltd was the EPC contractor responsible for implementation. A project commencement ceremony was held on April 28, 2016. Then, China Eximbank conducted an on-site, post-loan project inspection on August 31, 2019. On December 26, 2019, a ceremony to start the first power generation unit was held. The Nam Ou 3 and 4 hydropower stations successfully passed 72-hour trial operations on August 31, 2020 and September 7, 2020, respectively. Phase 2 was originally expected to reach completion in 2020. The 1st, 3rd, and 4th stages received certificates of completion from the Laos government on April 28, 2021. On September 15, 2021, the first unit of the seventh-level hydropower station on the Nam Ou River in Laos successfully entered into a 72-hour trial operation, marking that all power stations in the Nam Ou River basin had achieved the power generation target and will start the period of joint commissioning and transportation. The Nam Ou River Power Plant was completed on September 29, 2021, and a ceremony was organized to commemorate its completion. After Phases 1 and 2 were complete and the power plant came into full operation in 2021, it reportedly became the backbone of Laos’ power grid by taking up 28% of the country’s 4538MW total power generation capacity. However, insufficient high voltage transmission lines to evacuate electricity from the power plant to domestic demand centers led to a significant ‘idle capacity’ problem. The $1.3 billion syndicated loan for the project’s second phase financially underperformed vis-a-vis the original expectation of the lenders. In 2023, Nam Ou Power Co., Ltd. was unable to meet its principal and interest payment obligations to CDB, China Eximbank and China Construction Bank due to the fact that Électricité du Laos (EDL) — the Laotian state-owned power utility — did not honor its power purchase obligations under a power purchase agreement (PPA). Powerchina Resources Ltd. was subsequently called upon by the lenders to honor its partial repayment guarantee to help Nam Ou Power Co., Ltd. avoid defaulting on its payment obligations. By June 2023, Powerchina Resources Ltd. had made payments to CDB, China Eximbank and China Construction Bank worth $16.25 million. Then, in March 2025, Powerchina Resources Ltd. filed a lawsuit against EDL in Singapore, claiming $555 million in unpaid invoices under Phases 1 and 2 of the Nam Ou Hydropower Project. The lawsuit, which was filed with the Singapore International Arbitration Centre, alleges that EDL owes Nam Ou Power Co., Ltd. $486.27 million in unpaid invoices plus interest estimated at $65.79 million. The claims are associated with monthly invoices made between January 2020 and December 2024, which amount to about 4% of Laos' gross domestic product (GDP). Nam Ou Power Co., Ltd. also claimed damages of $3.02 million for EDL predominantly paying its dues using the Lao kip currency, despite the fact that a previous agreement had stipulated that 85% of the payments be made in U.S. dollars.