China Eximbank provides $8.075 million preferential buyer’s credit for Nam Mang 3 Irrigation Development Project (Linked to Record ID#63225, 63233)

Project narrative

On March 11, 2011, China Eximbank signed a preferential buyer’s credit (PBC) agreement for the Nam Mang III Irrigation Development Project (or Nam Mang 3 Irrigation Development Project). The borrowing terms of the PBC are unknown. However, it is known that the borrower was to use the PBC proceeds to finance 95% of the $8.5 million cost of a commercial (EPC) contract with Guangdong No.3 Water Resources and Hydropower Engineering Board (广东省水利水电第三工程局). The purpose of the project was to construct and upgrade existing irrigation channels and streams — measuring around 17,700 meters in length — that link three reservoirs supported by the Nam Mang III Hydroelectric Power Plant (also funded by China Eximbank, as captured via Record ID#63225 and Record ID#63233). The system was then to be fed by an additional reservoir, Nam Pod, which is located about 7 km from the existing Nam Mang 3 reservoir in the mountainous area of Phou Khao Khouay. Guangdong No.3 Water Resources and Hydropower Engineering Board (广东省水利水电第三工程局) was the EPC contractor responsible for implementation. The construction phase of the Nam Mang 3 Irrigation Development Project (Nam Pot) began in February 2012 and concluded in November 2013, six months ahead of schedule. The project was reportedly able to supply water to about 1,560 hectares of rice paddies in the dry season and more than 2,000 ha in the wet season. 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.