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Kuwait finances irrigation project in Lao Republic
March 2, 2015, 8:32 pm

A loan Agreement was signed Monday in the city of Vientiane between the Lao Peoples Democratic Republic and Kuwait Fund for Arab Economic Development (KFAED) whereby the Kuwait Fund will provide the government of Loa with a loan of KD 7 million (about USD 23.8 million) to help finance the expansion and upgrading of Nabong-Khoksa irrigation project.

In a press release, the KFAED said that the agreement was signed on behalf of the Lao Peoples Democratic Republic by Mme.Thipphakone Chanthavongsa, Deputy Minister of Finance, and Hesham Ibrahim Al-Waqayan, Deputy Director-General of KFAED.

The signing ceremony was attended by Nabeel Al Dakheel, Ambassador of Kuwait to Lao People's Democratic Republic and Waleed Al-Bahar, Regional Manager for East South Asia & Pacific Countries of Kuwait Fund.

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 of irrigable lands, thus increasing agricultural production, raising farmer's income, and contributing to the efforts for achieving food securities.

The project consists mainly of civil and electromechanical works 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 works.

It also includes land acquisition, consulting services for preparation the detail 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 KIP 275.00 billion, equivalent to about Kuwaiti Dinars 10.06 million. The Kuwait Fund loan will cover about 69.6 percent of the total cost of the project, including all cost in foreign exchange and part of the costs in local currency, while the Lao Government will cover the remaining cost.

The loan is made for a term of 24 years, including a grace period of 7 years, and is to be amortized in 34 semi-annual installments, the first of which will be due on the first date on which interest or other charges on the loan shall be payable, according to the loan agreement, after the expiry of the said grace period.

The loan bears interest at the rate of 1.5 percent per annum in addition to 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 2nd loan made by the Kuwait Fund to the Lao Peoples Democratic Republic as one loan has been previously provided by the Fund to the Lao People's Democratic Republic in the amount of Kuwaiti Dinars 7.35 million (equivalent to about 24.99 million U.S. Dollars) to finance a project in the Energy Sector.

It is also worthy of mention that Kuwait Fund had provided a technical assistance in 2008 of an amount of Kuwaiti Dinars 100,000 for the preparation of the technical and economic feasibility studies for this project and the amount expended from the technical assistance will be incorporated in the subject 

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