Laos gets Thai finance for railway extension

18-June-2012

Thailand has provided a grant and a soft loan to finance a railway extension from the Lao-Thai border into central Vientiane over the next couple of years, according to the Thai News Agency.

Lao Deputy Finance Minister Viengthong Siphandone and President of Thailand's Neighbouring Countries Economic Development Cooperation Agency (Neda) Acksiri Buranasiri signed an agreement on the cooperation in Bangkok last week.

The agreement covers financing for construction of the railway from Thanalaeng train station to a station in central Vientiane that is yet to be built.

Under the agreement Neda offers financial support for Laos to build the 7.75-kilometre railway track worth 1.65 billion baht (US$52.33 million) .

Thai financial assistance to Laos comprises a 495-million-baht ($15.70 million) grant which accounts for 30 per cent of the project price and another soft loan equivalent to the remaining 70 per cent, with a grace period of 10 years.

The project is an extended section of the rail line from Thailand's northeastern Nong Khai province to Thanalaeng station in Laos. The extended line is scheduled to be complete over the next two years, which will facilitate travel and cargo transportation to Vientiane.

According to the Neda chief, the extended railway will also support the Asean Economic Community (AEC), scheduled to be established by 2015, as it will further promote Thai investment in Laos, employment and orders for materials from Thailand.

Laos is, however, required to hire a Thai contractor and to use 50 percent of raw materials from Thailand.

The extended rail track is to be one metre wide, also known as the metre gauge, but will be adjustable to support the standard gauge of 1.46 metres to serve high-speed trains.

Laos plans to export products from its potash mines through Thailand's eastern Laem Chabang deep-sea port, so a new high-speed railway from China through Laos to Nong Khai and Bangkok will further promote the export of Thai fruit and other farm products and will also boost their prices.