Ambitious Rail Plan Opposed

At least nine Lao MPs are against the Laos-China high-speed rail network.
2012-10-26
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The proposed railway will connect China's Yunnan province to the Lao capital Vientiane.
RFA

Opposition is building against plans by Laos to launch construction of an ambitious Laos-China high-speed railway line project with Chinese loans, with at least nine legislators against the U.S. $7 billion plan, according to sources.

A key reason for the opposition by the MPs is that the Chinese loans could saddle the country with financial problems that would tighten Beijing's grip on Laos, the sources said, speaking on condition of anonymity.

The Lao parliament last week gave the go-ahead for the project, with officials saying Laos will go it alone despite a Chinese construction company's pullout from the original 420 kilometer (261 mile) joint venture.

Still, China will provide a loan to implement the newly approved project.

Based on the plans, the loans from EXIM Bank of China to cover the cost of construction will have to be fully guaranteed by the Lao government with "lots of strings attached," one source told RFA's Lao service.

The Lao government need not repay the interest for the loan for 10 years but the interest kicks in from day one of the loan approval and will balloon by the 11th year when they have to be repaid with the principal sum, the source said.

The borrowing is considered a "sovereign loan guarantee," which includes not only revenues from the project and all project assets but also royalties from Chinese mining operations—a gold and copper mine in the Sepone and Vilaboury districts of Savannakhet, and the Champassak bauxite mine, the largest in Asia, according to the sources.

Stringent conditions

Laos's acceptance of the stringent conditions of Exim Bank of China means that the rail project is "practically under China’s control even without it having to make any investment," the source said, debunking claims by Lao Deputy Prime Minister Somsavat Lengsavath that the project will benefit Laos in the long run.

Under a previous agreement signed between China and Laos two years ago, the Lao government was required to compensate villagers and urban dwellers who will need to be relocated from their land to make way for the rail project to be constructed by a Chinese company.

The compensation plan had represented the Lao government’s 30 percent stake in the project.

But sources said workers of the Chinese company that was to have undertaken construction of the rail project under the previous contract have remained in Laos, indicating that Chinese building expertise will be tapped.

A Laotian, who spoke on condition of anonymity, said, "When the project was suspended, these workers did not leave and are still waiting."

“They came some time ago, spread out in different locations and provinces. When the project was suddenly put on hold, some of the workers did not leave. The company is still here, biding time."

Leaders from Laos and China are expected to perform a project ground-breaking ceremony during a summit of the Asia-Europe Meeting (ASEM) forum on Nov. 5-6.

The rail project will connect the Lao capital Vientiane to the country's Luang Namtha province along the border with China, with the network linked further to a line from Kunming, the capital of China's Yunnan province.

Considering the mountainous nature of northern Laos, the railway will require 76 tunnels and 154 bridges, including two bridges across the Mekong River, according to a recent report in Vientiane Times.

Reported by RFA's Lao service. Translated by Viengsay Luangkhot. Written in English by Parameswaran Ponnudurai.

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