China spends billions on power transmission in Laos

Xinhua started a newsletter on the agreement between the Lao National Power Company (EDL) and the China Southern Power Grid Company (CSG) with praise. CSG is one of two power groups managed by the Chinese state.

“The establishment of EDLT is an important step in building a Chinese-Lao community with a common future, the latest achievement after the 3rd Mekong – Lan Thuong Conference”, the Chinese official news agency affirmed on September 3.

According to the shareholder agreement between Laos and China, EDLT will operate under the regulation of the Government of Laos but will “utilize the financial strength and experience of CSG in building, operating and managing the power grid. to build the national electricity network for Laos “. Details of the two sides’ shares were not disclosed.

The emergence of EDLT attracted international attention in the context of many concerns and warnings from credit rating organizations about Laos’ international debt, especially Chinese debt.

The website of the Chinese Embassy in Laos says that Vientiane will operate EDLT’s power transmission stations, but it does not reveal how much stake will be held on each side. However, according to the Chinese embassy, ​​” Laos can also gradually buy back shares in the course of its operations”.

Reuters news agency on September 4 citing 3 unnamed sources revealed that the majority of shares in EDLT will be held by China. Another anonymous source is optimistic that the arrival of the new company will help Laos gain a better position in negotiating electricity prices when it sells to foreign countries and “start making a profit”.

Neither EDL nor CSG responded to a Reuters request for comment. The governments of Laos and China were also silent when contacted by Reuters.

According to the sheet Vientiane Times, EDLT will invest about $ 2 billion in the future in the local power grid and transmission stations abroad. Electricity exports are one of the focal points in Laos’ development plan.

Speaking earlier during the signing ceremony in Vientiane, Lao Energy and Mining Minister Khammany Inthirath affirmed that EDLT is an important project in the industrialization process in Laos.

According to Mr. Inthirath, not only self-sufficiency and stabilization of electricity sources for the country’s development, EDLT will strengthen the connection of Laos infrastructure with neighboring countries, contributing to helping Laos become a “clean battery of Europe”.

Credit assessment firms and economic advisors to the Lao Government warned that Vientiane’s public debt has exceeded the dangerous threshold and is in danger of default. Laos is said to be asking for help from China, according to the Financial Times.

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