China Eximbank provides $199 million preferential buyer's credit for 88MW Houay Lamphan Gnai Hydropower Station Project

Project narrative

On August 12, 2009, China Gezhouba Group Company Ltd. (CGGC) and Electricité du Laos (EDL) — a state-owned power company in Laos — signed a $206,261,750 commercial (EPC) contract for 88MW Houay Lamphan Gnai Hydropower Station Project. China Eximbank and the Government of Laos signed a $199 million preferential buyer's credit (PBC) agreement to partially finance this EPC contract and project. The PBC carried the following borrowing terms: a 2% interest rate, a 15-year maturity, and a 5-year grace period. The purpose of the project was to construct a 88MW hydropower station on the Houay Lamphan Gnai river — near Kafe village within Thataeng district and Sekong (Xekong) Province — to improve power supply and satisfy demand for electricity. The dam that supports the hydropower station is a rock-filled dam with a clay core and a maximum reservoir of 140,000,000m³. CGGC was the EPC contractor responsible for implementation. Construction started on November 8, 2010. A dam impoundment ceremony was held on October 20, 2014. A project completion ceremony was held on November 14, 2015. 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.