Laos-China Railway Feasibility study commences

A full scale feasibility study of the Laos-China high speed rail project is now underway after the project design phase was completed recently, according to the Ministry of Planning and Investment.

The ministry unveiled a report on the construction of the 421km high speed railway at a joint meeting of planning and finance officials in Vientiane earlier this month.

railwaymapRFA

Initially, work on the railway, which will extend from the Lao-Chinese border south to Vientiane, was scheduled to start in 2011, with the entire project intended to be up and running within a five year period.

The Lao government considers the US$7 billion railway as one of the large scale investment projects that are central to the National Socio-Economic Development Plan for 2011 to 2015.

Work did not begin on schedule though, and there was widespread speculation that the project had been cancelled. Despite the delays, however, the project looks to be back on track.

According to a report on implementation of the National Socio-Economic Development Plan for 2011-2012, China has completed a survey of the proposed route as well as the major design work. A feasibility study of the route is now underway.

The Lao government is negotiating with the Chinese government to reach an agreement on the terms of the concession required to allow the project to go ahead.

The report does not specify a timeframe for China to complete the feasibility study or any details on a concession agreement with the Lao government. However, the report says a primary feasibility study already undertaken indicates that development of the project is highly likely and anticipates that construction will begin in the near future.

The Lao government has already established a provincial coordinating committee to facilitate construction, aiming to avoid any negative impacts, particularly in relation to the relocation of people living along the proposed railway route.

Lao officials who are involved in the project said that both the Lao and Chinese governments have made a strong commitment to see the project through to completion and expressed a strong belief that the project will evolve within the next five years.

Laos sees the proposed railway as important because it will provide a backbone to the country’s transport infrastructure, and help transform the landlocked country into a transport corridor linking the countries of the Mekong region.

The railway would make transportation faster, cheaper and more reliable, helping to boost trade, investment and tourism in Laos. It will take only a few hours to get from Vientiane to Luang Prabang once the high speed railway is in place.

China considers the railway through Laos as a critical part of the Asean-China railway, which will help boost trade between China and Asean after free trade agreements are set up with Asean member countries. The Laos-China railway will connect to the Thai high-speed railway before heading to Malaysia and Singapore.

Officials said Laos and China will establish a joint venture partnership to build and operate the railway, with the joint venture entity to seek a loan from the Chinese government to build the railway.

It is Chinese policy to finance the project as it believes the railway will boost trade and investment in the region. Laos will hold a 30 percent stake in the project while the rest will belong to a Chinese partner.