Narrative
Full Description
Project narrative
In 2016, China North Industries Corporation (NORINCO), a Chinese state-owned company, issued a $100 million supplier credit to Nakhonluang Water Supply Enterprise — a special purpose vehicle that is owned by Asia Investment, Development and Construction Sole Co., Ltd. — for the Water Pipe System Extension of Sandin Water Supply Plant and Replacing of Old Water Pipe for Nampapa Nakhnone Luang Project. The estimated borrowing terms of the loan included a 12.5-year maturity, a 0.5-year grace period, and a 2.5% interest rate. The Ministry of Finance of Laos issued a sovereign guarantee in support of the loan. The project involved the expansion of a 60 km water distribution pipeline from Sendine (Sandin) BOT Project to Naxaithong District; the expansion of an 80 km water distribution pipeline for Dongmakkhay water treatment plant to Saithany district and Saysettha district; and the installation of a water supply supervisory control and data acquisition system to help reduce the water leakage and improve the management efficiency. Upon completion, it was expected that the project would supply 30,000 cubic meters of healthy and sanitary water per day to nearly 23,000 households in the Lao capital of Vientiane. NORINCO was the EPC contractor responsible for implementing the project according to the terms of the commercial contract that was signed on March 31, 2016. Project implementation commenced on October 12, 2016 and ended on February 27, 2019.
Staff comments
1. The Chinese project title is 老挝万象市政供水项目. 2. One official source suggests that the face value of the supplier credit was $70 million. AidData relies on an estimate from a more recent official source for the time being. This issue merits further investigation. 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending commitments (worth $100 million) from all Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 2.5% in 2016. AidData estimates the interest rate of the NORINCO loan that supported the Water Pipe System Extension of Sandin Water Supply Plant and Replacing of Old Water Pipe for Nampapa Nakhnone Luang Project by using this figure. See https://www.dropbox.com/scl/fi/rtg798g5nyuf1xwnhcenv/Private-Chinese-Loans-to-Laos-November-2023-DRS-Data-Extraction.xlsx?rlkey=qpnwna418xgg3f38iki58a3g1&dl=0 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all ‘private’ sector lending commitments (worth $100 million) from all Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 12.5 years in 2016. AidData estimates the maturity of the NORINCO loan that supported the Water Pipe System Extension of Sandin Water Supply Plant and Replacing of Old Water Pipe for Nampapa Nakhnone Luang Project by using this figure. See https://www.dropbox.com/scl/fi/rtg798g5nyuf1xwnhcenv/Private-Chinese-Loans-to-Laos-November-2023-DRS-Data-Extraction.xlsx?rlkey=qpnwna418xgg3f38iki58a3g1&dl=0 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending commitments (worth $100 million) from all Chinese creditors to government and government-guaranteed borrowing institutions in Laos was 0.5 years in 2016. AidData estimates the grace period of the NORINCO loan that supported the Water Pipe System Extension of Sandin Water Supply Plant and Replacing of Old Water Pipe for Nampapa Nakhnone Luang Project by using this figure. See https://www.dropbox.com/scl/fi/rtg798g5nyuf1xwnhcenv/Private-Chinese-Loans-to-Laos-November-2023-DRS-Data-Extraction.xlsx?rlkey=qpnwna418xgg3f38iki58a3g1&dl=0 6. China Eximbank financed the Dongmarkkhai Water Supply Expansion Project (see Record ID#33828) and the Sendine (Sandin) BOT Project (see Record ID#85306).