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.