China and Laos will sign a construction contract for a $7.2 billion high-speed railway project planned by cash-strapped Laos, linking the two neighboring countries and extending to Thailand, the Lao government official is charge of the project said.
“Now we are waiting to sign both parties’ contracts on construction between Laos and China,” the Ministry of Public Works and Transport official, speaking on condition of anonymity, told RFA’s Lao Service.
“We’re trying to push for the contract to be signed soon, and it is expected to be inked sometime between the middle and end of this year.”
No further details of the deal, including the financing, have been made public.
On March 10, Lao officials had held a meeting to identify the scope of cooperation with Thailand, as the railway will extend there, he said.
When Lao officials met with their Thai counterparts last month in the Lao capital Vientiane, the Thai side had requested that Laos provide clearer information about the part of the project that will stretch into Thailand, the official said.
The Thais wanted to know plans for a fifth bridge between Thailand’s Beung Kan province and Laos’ central Bolikhamsay province, the railway gauge Laos will use, whether it will link to Thailand’s railway, and the border checkpoints Laos will need to connect to, he said.
Previous discussions
Lao deputy prime minister and foreign minister Thongloun Sisoulith had discussed the project with Chinese officials last August on the sidelines of a regional meeting in Myanmar
The Chinese side had said that Beijing would speed up studies on the financial implications of the project to pave the way for its commencement, although no specific date had been given.
During Lao Prime Minister Thongsing Thammavong’s official visit to China last April, the two sides agreed that the Lao-Chinese railway project “was crucial to boosting economic and trade cooperation between the two countries,” according to a joint statement.
The original railway construction plan called for China to finance 70 percent of the 420-kilometer (260-mile) rail line linking the capital Vientiane to southwestern China, with work to begin in 2011 and end in 2015, according to the state-owned Vientiane Times.
The Lao parliament gave the go-ahead for the project in October 2012 even after a Chinese construction company pulled out of the venture fearing the rail link would not generate enough profit.
The Manila-based Asian Development Bank has said it believes the project is unaffordable and could plunge Laos into debt.
The railway will form part of a longer link from China’s Yunnan province through Laos, Thailand, and Malaysia to Singapore.
Other railway projects
In December 2013, 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., is building 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.
The other railway being pursued by Laos is a 3.5-kilometer (2-mile) link spanning the Mekong River between Vientiane and Nongkhai, Thailand.
Landlocked Laos expects the new railway projects to lower the cost of exports and consumer goods while boosting investment in the impoverished nation of 7 million people.
Reported by RFA’s Lao Service. Translated by Ounkeo Souksavanh. Written in English by Roseanne Gerin.