China Eximbank provides $292.6 million preferential buyer's credit for 130MW Nam Khan 2 Hydropower Project

On October 13, 2006, the Chinese Government and the Government of Laos signed a Memorandum of Understanding (MOU) regarding the Nam Khan 2 & 3 hydropower plants. Then, on March 19, 2010, China Eximbank and the Government of Laos signed a $292.6 million preferential buyer’s credit (PBC) agreement for the 130MW Nam Khan 2 Hydropower Project. The PBC carried the following borrowing terms: a 20-year maturity and 2% interest rate. The proceeds of the PBC were to be used by the borrower to finance approximately 95% of the cost of a $308.5 million commercial (EPC) contract that Sinohydro Corporation Ltd. and Électricité du Laos (EDL) signed in August 2009. This project involved the construction of two 65MW hydropower stations — capable of generating 558 GWh of electricity per year — on the Khan River and a 115kV power transmission line that runs from Xieng Khouang to Luang Prabang city. The electricity generated by the two hydropower stations was to be transmitted to a substation in Xiengngeun district in order to ultimately supply power to the country’s northern provinces and the capital city of Vientiane. The project’s large reservoir was also to be developed as a major tourism site in order to improve the living conditions of people in the area. Sinohydro Corporation Ltd. was the EPC contractor responsible for implementation. Construction began on March 26, 2011, and an impoundment ceremony took place on April 18, 2015. The project was ultimately completed on November 28, 2015.

Additional details

The project is also called 130 MW Nam Khan 2 Hydropower Project, the 126.2MW (2x63.1 MW) Nam Kham 2 Hydropower Project, and the Nam Khan 2 HPP Project. The Chinese project title is 老挝南坎2水电站 or 南坎2水电站项目. The Lao project title is ເຂື່ອນໄຟຟ້າ ນ້ຳຄານ 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies the face value of the loan that supported this project as $308 million. However, this estimate appears to be based on the EPC contract value and EDL reports that China Eximbank only financed 95% of the cost of the EPC contract

Number of official sources

14

Number of unofficial sources

17