Laos: EIB to help protect 1,400km roads in rural Lao PDR from climate change
1 April 2019
Earlier today Mr. Luca Lazzaroli, Director General of the European Investment Bank, formally agreed new support to improve 1,400km of currently unpaved roads in six provinces. This will enable parts of the national road network most vulnerable to a changing climate to be paved, elevated and stabilised.
During the three-day visit to the Lao PDR, Mr. Lazzaroli signed a EUR 5 million Grant Agreement with H.E Dr Kikeo Chanthaboury on behalf of Government of the Lao PDR. The grant will be used alongside the European Investment Bank’s EUR 20 million loan for the Lao Resilient Rural Roads project. Once complete the upgrading work will better protect rural roads from flooding, storms and drought across Laos.
“The Lao PDR welcomes the support of both the European Investment Bank and the European Union that reflects our shared goals of reducing the impact of climate change on vulnerable communities. The European Investment Bank has a unique technical and financial experience of supporting strategic transport projects around the world. This project will benefit communities across Lao PDR by improving road connections and reducing road closures after bad weather.” said H.E. Dr. Kikeo Chanthaboury, Vice Minister of Planning and Investment, Ministry of Planning and Investment.
“The European Investment Bank, as the EU Bank, is committed to supporting climate action and supports transformational infrastructure projects that protect against a changing climate. Rural communities in Laos are amongst the most vulnerable anywhere in the world to extreme weather. The EIB is pleased to provide EUR 20 million for rural road investment essential to improve the livelihoods of thousands of people across Laos and welcome the EUR 5 million grant support from the European Union. This project will be a model for Lao P.D.R. and the rest of the world. This project is only possible following the professional cooperation of Laos, European Union, Nordic Development Fund and World Bank partners involved.” said Mr. Andrew McDowell, European Investment Bank Vice President responsible for lending operations in Southeast Asia.
“The European Union and Lao P.D.R. are joint signatories of the Paris Climate Agreement. This new cooperation to better protect essential transport infrastructure from a changing climate demonstrates our shared commitment to reduce the impact of climate change on vulnerable communities. Combining the financial strength and technical experience of the European Investment Bank with support from the European Union and other partners will enable a greater impact of this transformational project.” said Ambassador Léon Paul Faber, Head of the European Union Delegation to Lao P.D.R.
EIB and EU support for the project was formally agreed at the start of a five-day regional mission, in the Lao PDR and Thailand, led by Mr. Lazzaroli.
The rural road upgrading scheme is expected to be completed by 2021. The borrower is the Ministry of Finance and promoter is the Ministry of Public Works and Transport.
New road project to benefit most vulnerable provinces
More than 1.6 million people living in Phongsaly, Houaphan, Oudomxay, Xiengkhouang Xayabouly and Bolikhamsay provinces will benefit from more reliable and quicker travel, as average speeds on the roads are expected to double.
Road improvements under the new initiative will include safety measures, including better signs, dedicated footpaths, marked pedestrian crossings and lighting.
At present travel across the six provinces covered by the project are faced with frequent landslides and flooding. Road closed following extreme weather frequently prevent inhabitants of remote communities accessing markets, health and education services for many weeks.
Local contractors will be engaged for construction of the new rural road project, providing significant local employment benefits.
Project supported by international partners
The European Investment Bank will support the EUR 60 million project alongside the Lao government, Nordic Development Fund and World Bank and a EUR 5 million grant from the European Union Asia Investment Facility.
The new road project follows successful implementation of the first World Bank Lao Road Sector Project.
EIB track record supporting sustainable transport across Asia
In recent years, in support of climate action in Asia, the EIB has supported new sustainable urban transport projects in India, Vietnam, Bangladesh and China.
Over the last five years the European Investment Bank, the world’s largest international public bank, has provided more than EUR 74 billion for new investment in transport projects worldwide.
The EIB today approved EUR 8.1 billion of new financing for climate action, sustainable development, health, and education investment across Europe and around the world. This included support for large and small-scale renewable energy projects, for the development of electric vehicles, and for improving the energy efficiency of homes. EIB financing approved today will also help to build water infrastructure and rural roads in developing countries impacted by a changing climate.