China Eximbank provides $480 million loan for China-Laos Railway Project (Linked to Project ID#85304)
Constant 2017 USD
Funding agency [Type]
Export-Import Bank of China [State-owned Policy Bank]
Lao People's Democratic Republic
Transport and storage (Code: 210)
In December 2016, Lao-China Railway Company (老中铁路有限公 or LCRC) — a joint venture between three Chinese state-owned enterprises that collectively hold a 70% ownership stake and one Lao state-owned enterprise that owns a 30% ownership stake — signed a BOT concession agreement with the Government of Laos for the China-Laos Railway Project. The total cost of the project is $5.9 billion and it is being financed according to 60:40 debt-to-equity ratio ($3.54 billion of debt and $2.36 billion of equity). Lao-China Railway Company directly secured $3.54 billion of debt financing from China Eximbank (captured in Project ID#85304), and the Government of Laos and the Chinese Government jointly contributed $730 million and $1.63 billion of equity financing, respectively. In order to make its $730 million equity contribution to the project, the Government of Laos secured a $480 million loan from China Eximbank (captured in Project ID#33726) and it agreed to provide $250 million of its own funding (in annual installments). The Government of Laos signed the China Eximbank loan agreement on September 8, 2016. The loan carries the following borrowing terms: 2.3% interest rate, 25-year maturity, and 5-year grace period. The Government of Laos did not issue a sovereign guarantee in support of the loan, but it did pledge revenues from a bauxite mine and three potash mines in Laos as sources of collateral to secure the loan. An intergovernmental framework agreement on November 13, 2015 preceded the signing of this loan agreement. The purpose of the project is to construct a 418 mile railway segment that connects Kunming, the capital city of southwestern China’s Yunnan Province, with Laos’ capital city, Vientiane. This railway segment will pass through the capital of Vientiane and the four provinces of Luangnamtha, Oudomxay, Luang Prabang, and Vientiane. It is part of a larger Kunming-Singapore Railway Project (also known as the Kunming-Singapore Trans Asian Railway Corridor), which starts from Kunming and ends in Singapore, passing through Laos, Thailand and Malaysia. The single-track electrified rail line has a designed speed of 160 km/hour and it is being built in standard gauge. 47% percent of the railway will pass through 75 tunnels and 15% will pass over viaducts spread over 167 bridges. There are 32 planned stations along the route, and according to the Ministry of Public Works and Transport of Laos, 50 meters of land on either side of the tracks will be reserved for the railway's developers. The final station will be Thanaleng station. Xay Village in Xaythany District is to be the site of Vientiane Station, the largest station on the railway. According to a 2012 feasibility study, the internal rate of return (IRR) of the project is 4.56%. Sinohydro Corporation, Power Construction Corporation of China, China Railway No. 5 Group, China Railway No. 2 Group and China Railway No. 8 Group are the contractors responsible for implementation. The formal start of works was announced in December 2015. However, progress was initially slow due to unresolved property issues as well as detailed design works. A groundbreaking ceremony did not take place until December 25, 2016. (Note: An earlier groundbreaking ceremony was abandoned in 2011 after reports emerged that China was demanding large land concessions along the railway line in return for funding its construction.) ‘Full-scale construction’ began in the summer of 2017. By mid-2018, the project had achieved a 20% completion rate. Then, on March 27, 2020, the first 500-meter long track was successfully laid in Vientiane. Construction of the Vientiane Railway Station commenced on July 3, 2020. Railway infrastructure was reportedly 90% complete as of July 2020. The expected project completion date is December 2, 2021. Upon completion, the Laos-China Railway is expected to reduce the time necessary to travel from Mohan-Boten to Vientiane from three days to less than three hours.
This project is also known as the Construction of the Lao Section of the Kunming–Singapore Railway Project, the Boten-Vientane Railway Project, the Mohan-Vientiane Section of China-Laos Railway Project, and the Kunming-Vientiane High-Speed Railway Construction Project. The Chinese project title is 中老铁路 or 中老铁路项目. The Lao project title is ທາງລົດໄຟ ລາວ-ຈີນ. The China Eximbank loan that was issued to the Government of Laos in support of the China-Laos Railway Project is included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. However, the China Eximbank loan that was issued to the Lao-China Railway Company, which is partially owned by the Government of Laos, in support of the China-Laos Railway Project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
Number of official sources
Number of unofficial sources
Receiving agencies [Type]
Government of Laos [Government Agency]
Implementing agencies [Type]
China Railway No. 2 Group Co., Ltd. [State-owned Company]; China Railway No. 5 Engineering Group Co. Ltd [State-owned Company]; China Railway Number 8 Engineering Company (CREC8) [State-owned Company]; Power Construction Corporation of China Ltd. (POWERCHINA) [State-owned Company]; Sinohydro (PowerChina) [State-owned Company]
Revenues from a bauxite mine and three potash mines in Laos