China Eximbank provides $148 million loan for 86MW Nam Phay Hydroelectric Power Plant (HPP) Project

Project narrative

On November 25, 2013, a special purpose vehicle called Nam Phay Power Company Ltd (NPPC or 持有的南湃电力有限公司) was established — as a joint venture of the Hong Kong Frame Star Development Ltd. (85% ownership stake) and Électricité du Laos (15% ownership stake) — in order to finance, develop, implement, and operate the 86MW Nam Phay Hydroelectric Power Plant (HPP) Project. Then, on February 28, 2014 and March 4, 2014, NPPC and the Government of Laos signed a franchise (concession) agreement for the 86MW Nam Phay Hydroelectric Power Plant (HPP) Project. The total cost of the project was $218 million and it was financed with a mix of debt and equity. On December 24, 2014, NPPC was making preparations to submit an application to China Eximbank for a $148 million loan with a 15 year maturity, a 3 year grace period, and an interest rate of 6-month LIBOR plus a 3.5% margin. The borrower expected to make repayments between September 21, 2015 and March 21, 2030. Then, on June 23, 2015, China Eximbank and NPPC signed a loan agreement worth approximately $148 million (RMB 979,256,800) for the 86MW Nam Phay Hydroelectric Power Plant (HPP) Project. Norinco provided a corporate repayment guarantee for the loan. Norinco International Cooperation Ltd.’s equity stake in NPPC (via Hong Kong Frame Star Development Ltd.) was also pledged as a source of collateral. The purpose of the project was to construct a 86MW hydroelectric power plant in the Phoun region north of Xaysomboun province, 249.5 km away from the capital city of Vientiane. The project involved the construction of a headwork, headrace power system and transmission system. The project includes 2 pelton turbine generators with 86MW of power generation capacity, 397,000 MWh of annual power supply, and projected annual mean power output of 419.52 GW.h. The dam site is located in a valley upstream of the Nam Phay river, the tributary of Nam Ngum river which is the level 1 tributary of Mekong River. The powerhouse is located on the right bank of Nam Leuk River and it contains two 43-MW Pelton turbines that transmit power through a 115-kV transmission line from the Nam Phay switchyard to the Thongkhoun II substation. Powerchina Resources Ltd. was the EPC contractor responsible for implementation. In July 2011, an environmental impact assessment (EIA) was completed. Then, on May 16, 2012, the project feasibility study report was approved. On April 30, 2013, the Government of Laos approved the EIA. Construction began in March 2014 and was originally scheduled to reach completion within 42 months (October 2017). Reservoir impoundment took place on June 18, 2016. On May 8, 2017, the plant’s power generating units successfully passed 72 hour commissioning and came into full load operation. The project then passed a final inspection on June 20, 2017. The project achieved its commercial operation date (COD) on November 1, 2017. On December 1, 2017, the Managing Director of Électricité du Laos (EDL), Mr. Bounoum Sivanpheng signed the power plant’s COD certificate. Then, on January 22, 2018, the power plant was officially inaugurated. By the end of November 2020, it had produced about 1.3 billion kWh of power. In December 2020, it passed inspection after 1,302 days of operation.