China Southern Power Grid Takes Majority Control of Lao Power Grid Operator

On September 1, state-owned China Southern Power Grid signed a shareholder agreement with the Lao State Power Company.  According to sources cited by Reutersthe agreement effectively gives China Southern Power Grid majority control over the companies’ joint venture, Electricite du Laos Transmission Company Limited (EDLT), which was created to manage the country’s national power grid and its expected power export capacity to neighboring countries.  The latter is reportedly critical to Laos’ development plans.

Little is publicly known about the agreement beyond the fact that EDLT will leverage China Southern Power Grid’s “financial strength and mature experiences in power grid construction, operation, and management” in the operation of the grid.  Still, the deal, alongside other Chinese projects and investments in the country that have made China the largest creditor to Laos and raised its debt burden to likely unsustainable levels, adds to the strategic position of influence that China has cultivated over the country in this domain. 

As per 2019 estimates, Laos’ debt to China alone amounts to 45% of GDP, while the country’s overall debt was 59% of GDP.  In 2020 estimates, Laos’ overall debt is expected to reach 68% of GDP.