China Eximbank provides $600 million preferential buyer’s credit for 240MW Nam Ngum 4 Hydropower Plant Project

On September 8, 2016, during Premier Li Keqiang's visit to Laos, China Eximbank and the Lao Ministry of Finance signed a $600 million preferential buyer’s credit (PBC) agreement for the 240MW Nam Ngum 4 (NG4) Hydropower Project. Électricité du Laos (EDL) — the state corporation of Laos that owns and operates the country's electricity generation, electricity transmission and electricity distribution assets — became the effective borrower of the loan. However, it is unclear if it co-signed the PBC agreement or an on-lending agreement with the Lao Ministry of Finance. The borrowing terms of the PBC are unknown. However, it is known that the borrower was to use the proceeds from the PBC to finance 85% of the cost of a $706 million EPC contract between EDL and China National Heavy Machinery Corporation (CHMC), which was signed in late 2015. The purpose of the project is to construct a 240MW hydropower plant with three 80MW turbines and a 74-meter high dam with water storage capacity of 107,400,000 cubic meters. The project also involves the construction of a 17 km tunnel. The project site is located approximately 10 km west of a proposed slaughterhouse site near the confluence on Nam Kho River and Nam Ngum River in Paek District and Xiangkhoang Province. Its precise locational coordinates are as follows: Latitude: 19°5'2.04" and Longitude: 102°52'46.56”. CHMC is the EPC contractor responsible for implementation. It appears to have hired VLV Xoumphonphakdy (a Lao company) as a subcontractor. Construction began on January 25, 2018. River closure occurred on October 15, 2019. Then, on February 15, 2021, a 200 ton bridge crane at the Nam Ngum 4 Hydropower Plant successfully completed a load test. As of May 2022, the project had achieved a 90% completion rate. The expected project completion date is 2023.

Additional details

1. This project is also known as the Nam Ngum 4 Hydropower Project and the NG4 Project. 2. The Chinese project title is 南俄4水电站项目. 3. 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 China Eximbank loan that supported this project as $322 million. However, official sources indicate that the face value of the loan was equivalent to $600 million, or 85% of the cost of the EPC contract. 4. In 2017, the World Bank reported that EDL was seek to divest its ownership in NG4 and NG3 (captured via Project ID#63450) in order to reduce its indebtedness. These divestments were expected to provide substantial financial relief to EDL as its NG3 and NG4 project debts amounted over $1 billion by 2017. However, it is unclear if the China Eximbank project debt for NG4 has been transferred from EDL to a different entity. This issue merits further investigation.

Number of official sources

19

Number of total sources

28