Kuwait agrees to 192 billion kip loan to finance irrigation project

Kuwait Fund for Arab Economic
Development yesterday agreed
to loan 7 million Kuwaiti Dinars,
about 192 billion kip, to assist
in financing the expansion and
upgrading of Nabong—Khoksa
irrigation project in Laos.
The signing ceremony for
the loan agreement was held
at the Ministry of Finance in
Vientiane and signed between
Deputy Minister of Finance, Mrs
Thipphakone Chanthavongsa
and Deputy Director General of
Kuwait Fund for Arab Economic
Development, Mr Hesham
Ibrahim Al-Waqayan. It was
witnessed by Ambassador of
the State of Kuwait to Laos,
Mr Nabeel Al Dakheel, and
Regional Manager for Southeast
Asia & Pacific Countries of
Kuwait Fund, Mr Waleed Al-
Bahar as well as officials from
the Lao Ministry of Finance.
The project aims to support
the economic and social
development of eleven villages
in Pak Ngum district, through
the rehabilitation, improvement
and expansion of the existing
Nabong — Khoksa pumping
irrigation system, to convey
water from Nam Ngum River
intake to cover about 4,130 ha
of irrigable lands, thus increasing
agricultural production, raising
farmers’ income and contributing
to food security efforts.
The works will be mainly
civil and electromechanical
to rehabilitate and improve
the existing irrigation canals,
construct new canals along with
the relevant structures, and to
rehabilitate, procure and install
all the mechanical and electrical
facilities.
The project also includes land
acquisition, consulting services
for preparation of the detailed
design, tender documents and
project supervision, as well as the
engagement of a technical expert,
in addition to the institutional
support. The project is expected
to be completed by the end of
2020.
The total cost of the project
is estimated at 275 billion kip,
of which about 47 billion kip
or about 1.72 million Kuwaiti
Dinars is issued in foreign
currency representing about 17
percent of the total cost. The
Kuwait Fund loan will cover
about 69.6 percent of the total
cost of the project, including all
costs in foreign exchange and
part of the cost in local currency,
while the Lao Government will
cover the remainder.
The loan term of 24 years,
included a grace period of 7
years, and was to be amortised
in 34 semi-annual instalments,
the first of which would be due
on the first date on which interest
or other charges of the loan were
payable, according to the loan
agreement, after the expiry of the
grace period.
The loan interest rate is 1.5%
per annum with a service charge
of 0.5 percent per annum to
cover administrative costs and
the expenses of implementing the
loan agreement. This loan will be
the second made by the Kuwait
Fund to Laos with the other of
7.35 million Kuwaiti Dinars
(equivalent to about US.99
million) to finance a project in
the energy sector.
The Kuwait Fund also
provided 100,000 Kuwaiti
Dinars as technical assistance
in 2008 for the preparation of
feasibility studies for the project
with the amount expended from
the assistance to be incorporated
in the loan.