ChinaLao Economy

Laos-China Rail Expected To Begin Construction In November

The groundbreaking ceremony to begin construction of the Laos-China rail project to link Laos with China and other Asean member counties is expected to begin in November if things go as planned, a minister said on Friday.

Minister of Public Works and Transport Dr Bounchanh Sinthavong briefed the media on the progress made on the high-speed railway project at a press conference held shortly after the closing of the three-day biannual meeting between the cabinet, Vientiane Mayor and provincial governors where the minister reported about the project.

Construction of the project, which was initially estimated to cost US$6.8 billion, will take about five years to complete.

The two governments agreed that state enterprises of both sides joint venture in developing, managing and operating the railway project, which will connect the Lao capital of Vientiane with the Chinese border at a distance of 417 km.

“We are preparing to establish the Lao National Railway Enterprise to joint venture with the Chinese enterprise to develop, manage and operate the project,” he told the media.

The two governments agreed to directly contribute 40 percent of the total investment for the project with the Lao government responsible for 30 percent of this, amounting to US$840 million, and the Chinese government contributing 70 percent.

The enterprises of the two countries will source and be responsible for the remaining 60 percent of the total investment.

In the event the Lao government struggles to make its contribution of US$840 million, the Chinese side has agreed to provide a low-interest loan of US$500 million to Laos while the rest will have to be sourced by Laos.

Revenue to be generated from a bauxite mine and three potash mines in Laos are to be used to secure the Chinese loan. The 20-year loan period will carry an annual interest rate of three percent with an interest-only period, i.e. no repayment of principle, for the first five years.

The minister gave assurance that the revenue to be generated from the mines would be sufficient to repay the loan.

In order to ease public concern that the government will have an untenable debt from the project, the minister said the Lao government is responsible for only US$840 million as the remaining 60 percent of the total investment will be sourced by and be the responsibility of the two enterprises.

Dr Bounchan said his ministry has prepared 11 frameworks for the project’s implementation including preparing a draft of the co-finance master agreement.

The planned single track with a 1.435-metre standard-gauge rail network will have 31 stations, including five main stations, and 76 tunnels with a total length of 195.78 km. The line will also have 154 bridges of 67.15 km in overall length.

When being used for passenger transport the trains will travel at a maximum speed of 160 km per hour, but when goods are being transported the maximum speed will be 120 km per hour.

The Lao National Assembly approved the project in 2012 as part of plans to turn Laos from a landlocked country into a land-linked nation.

The planned rail project will form part of the regional rail link known as the Kunming-Singapore rail line over a distance of 3,000km. The high-speed line will link China’s Kunming all the way down to Singapore, passing through Laos, Thailand and Malaysia.

Source: Vientiane Times