China to Press Ahead With Financing of Lao Railway Project

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Laos hopes a railway between Vietnam and Thailand and another connecting Thailand and China will help drive socio-economic development in the impoverished country.
Laos hopes a railway between Vietnam and Thailand and another connecting Thailand and China will help drive socio-economic development in the impoverished country.

China is still keen to finance a U.S. $7.2 billion high-speed railway project planned by cash-strapped Laos that would link the two neighboring countries, a Lao official said, even though Beijing has remained silent over its role in the project.

The project was discussed between Lao deputy prime minister and foreign minister Thongloun Sisoulith and high-ranking Chinese officials at the sidelines of a regional meeting in Myanmar earlier this month, the railway official said, speaking on condition of anonymity.

The Chinese side said at the talks that Beijing would speed up studies on the financial implications of the project to pave the way for its launching soon, according to the Lao official. No specific date was given.

“[We are] renegotiating to understand each other,” the official said, adding both sides had not yet reached an official agreement on the issue, and that the Lao Ministry of Public Works and Transport would announce details when they were known.

During Lao Prime Minister Thongsing Thammavong’s official visit to China in April, the two sides agreed that the Lao-Chinese railway project “was crucial to boosting economic and trade cooperation between the two countries,” a joint statement had said.

They vowed to look for an “effective method of cooperation” on the project, it said.

Under the original plan, China was to fund 70 percent of the 420-kilometer (260-mile) rail line linking the capital Vientiane to southwestern China, and work on the project was to begin in 2011 and be completed by 2015, according to the state-owned Vientiane Times.

The Lao parliament gave the go-ahead in October 2012 for the project even after a Chinese construction company pulled out of the venture fearing the rail link would not generate enough profit.

But there has been little movement on both the financing and construction fronts to indicate the mega-project will proceed as planned.

The Manila-based Asian Development Bank believes the project is unaffordable and could plunge Laos into debt.

ASEAN-China rail link

The railway would form part of a longer ASEAN-China rail link from China’s Yunnan province through Laos, Thailand, and Malaysia to Singapore.   

Last December, Laos broke ground on another high-speed railway project to connect the country’s western border with Thailand to Vietnam.

The Malaysian company, Giant Consolidated Ltd., will build and operate the $5 billion, 220-kilometer (140-mile) between Savannakhet, on Laos’s southwestern border with Thailand, to the Lao Bao border gate with Vietnam in the east.

Construction is set to kick off in December this year and is expected to be completed within four years, the Vientiane Times reported in June.

The other railway being pursued by Laos is a 3.5-kilometer (2-mile) link spanning the Mekong River between the capital Vientiane and Nongkhai, Thailand.

As a landlocked country, Laos expects the new railway projects to lower the cost of exports and consumer goods while boosting investment in the poverty-stricken nation.

Reported by RFA’s Lao Service. Translated by Bounchanh Mouangkham. Written in English by Roseanne Gerin.

Comments (1)

Mike Boddington

from Vientiane

The figure of $7.2 billion was the construction cost of the railway from the Chinese boder to Vientiane, when it was first proposed, which I think was in 2006 or 2007. If those promoting this idea think that the price will have stayed the same, they might consider the experience of other major construction projects, such as the Channel Tunnel between France and England, which came in at an 80% cost over-run, and was only 19 months behind schedule, not 10 or 12 years.

Of course, China has incredible experience in building high-speed railways, but has anyone revisited those costs since they were first prepared?

Aug 22, 2014 12:42 AM





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