Chinese firm ‘to take majority control’ of Laos’ electric grid amid belt and road-linked debt default fears

China is Laos’s biggest creditor, and the deal will bind the landlocked, mountainous country of 7 million people closer to its giant neighbour

Laos has spent heavily on China-financed hydroelectric schemes and a new Chinese high speed railway – sparking warnings of a potential debt default

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A farmer works in a paddy field under power lines in Laos’ Khammouane province in this 2013 file photo. Photo: Reuters

Published: 8:09pm, 5 Sep 2020Updated: 8:16pm, 5 Sep 2020

The poor, small Southeast Asian country of Laos is set to cede majority control of its electric grid to a Chinese company, as it struggles to stave off a potential debt default, people with direct knowledge of the agreement said.

The deal comes at a time when critics accuse Beijing of “debt trap diplomacy” to gain strategic advantage in countries struggling to repay loans taken out under President Xi Jinping’s global infrastructure-building Belt and Road Initiative.

China is Laos’s biggest creditor, and the deal will bind the landlocked, mountainous country of 7 million people closer to its giant neighbour.

The power grid shareholding deal was signed on Tuesday between state-owned Electricite du Laos (EdL) and China Southern Power Grid Company, according to Chinese state news agency Xinhua, which did not give details of the new ownership.

Representatives from China Southern Power Grid and Electricite du Laos shake hands during a signing ceremony in Vientiane, Laos, on Tuesday. Photo: Xinhua

Three people with knowledge of the matter said it would give majority control of the new Electricite du Laos Transmission Company Limited (EDLT) to the Chinese company.

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