Laos seeks better rail loan terms from China

Laos seeks better rail loan terms from China

The government of Laos is preparing for talks with China in an attempt to secure a better loan interest rate for a joint railway project.

Beijing has offered a US$500-million loan with a 3% interest rate for 20 years, the Vientiane Times reported on Friday without naming a source.

The two countries earlier agreed on a route from the Chinese border in Luang Namtha province, via the old capital of Luang Prabang to Vientiane. The railway line would link with Thailand in Nong Khai province, where another Chinese-backed line is to be built.

The 417-kilometre line in Laos is to be built by a joint venture in which the two governments share 40% of the $6.8-billion cost and their state enterprises the rest.

Bounchanh Sinthavong, the Lao minister of public works and transport, said he expected construction of the project would begin next month and would be completed in five years.

The project, approved by Laos in 2012, is already far behind schedule because of conflicts with China over the form of investment and loan details.

A Thai-Chinese rail project is also facing delays because of disagreements over Beijing's loan terms and the nature of the joint venture. Construction was supposed to have started this month but has now been pushed back to May of next year.


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