China Development Bank provides $242.7 million loan for 180MW Nam Ngiep 2 Hydropower Plant Project (Linked to Project ID#63758)

On August 25, 2010, China International Water & Electric Corp (CWE) and the Government of Laos signed a Nam Ngiep 2 Hydropower Plant Project Development Agreement. Then, on June 16, 2011, Nam Ngiep II Power Company Limited — a special purpose vehicle and joint venture between CWE (90% ownership stake) and EDL-Gen (10% ownership stake) — and Électricité du Laos (EDL) signed a Shareholders Agreement. On October 19, 2011 EDL and CWE signed a commercial (EPC) contract for the Nam Ngiep 2 Hydropower Plant Project. China Development Bank then issued a $242.7 million loan to Nam Ngiep II Power Company Limited to support the implementation of the Nam Ngiep 2 Hydropower Plant Project (captured in Project ID#63757). The proceeds of the loan were to be used by the borrower to partially finance the EPC contract between EDL and CWE. The borrowing terms of the CDB loan are unknown. The purpose of the project was to construct a 180MW hydropower station (with three 60MW hydro turbines) on the Nam Ngiep River in the southeastern province of Xieng Khouang province, about 70 kilometers from the provincial capital of Phonsavan. The project involved the construction of a transfer weir on the Nam Ngiep River, a 7.4 km long transfer tunnel, a 70 meter high earth rock dam on the Nam Sen, a 10.9 km long headrace tunnel, a surface power station on the Nam Siam equipped with 3 x 60 MW Francis turbines and generators, and a 230 kV transmission line to the Tha Vieng substation. The power station was built to provide electricity for industrial purposes and urban growth, and also provide irrigation water for agricultural development. Upon completion, the power plant was designed to have capacity to generate 723 million kWh per of electricity annually. The approximate coordinates of the project site are: 19.1262°N, 103.3186°E. CWE was the EPC contractor responsible for implementation. On December 8, 2010, the Government of Laos approved the environmental impact assessment (EIA) for the project. Then, on December 23, 2011, a groundbreaking ceremony was held. The project was completed during the first week of April 2015. The hydropower station was put into operation on October 2, 2015. According to EDL managing director Sisavath Thiravong, the Nam Ngiep 2 power plant is expected to generate about $43.38 million of revenue per year. The project was implemented on a build–own–operate–transfer (BOOT) basis and financed with a mix of debt and equity. CWE’s equity contribution is captured in Project ID#63758. Nam Ngiep II Power Company Limited signed a 25-year concession agreement with the Government of Laos on August 18, 2011. According to the agreement, Nam Ngiep II Power Company Limited will transfer the project to the Government of Laos after 25 years of operation.

Additional details

1. This project is also known as the Nam Ngiep 2 Hydropower Station Project, the Nam Ngieb 2 Hydropower Plant Project, and the Nam Ngiep II Hydropower Project. 2. The Chinese project title is 南椰2水电站项目 or 南椰２水电站. 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 loan that supported this project as $345 million. However, this estimate appears to be based on the overall cost of the project, which was financed with a mix of debt and equity. 4. Several sources indicate that the project was financed according to an 80:20 debt-to-equity ratio, which implies that $278 million of debt financing was provided and $68 million of equity financing was provided. AidData relies of the face value of the loan ($242.7 million) that is reported by a law firm (King & Wood Mallesons) that served as a transaction adviser for the CDB loan agreement with Nam Ngiep II Power Company Limited. UNOPS also reportedly provided a loan for this project. However, this issue requires further investigation.

Number of official sources

13

Number of total sources

27