LAO NATIONAL ROAD 2

Promoter – Financial Intermediary

MINISTRY OF PUBLIC WORKS AND TRANSPORT - LAO PEOPLE'S DEMOCRATIC REPUBLIC

Location

• Lao People's Democratic Rep.

Description

This is the second allocation under "Framework Loan Lao Resilient Roads" to finance works aiming at improving Lao National Road 2 East (NR2E), from the Oudomxay Provincial centre to the Vietnam border, an important east-west corridor in South Asia linking Thailand-Laos-Vietnam (Asian Highway No. 13). With a total length of 295 km, NR2 consists of a West section (NR2W) (145 km) connecting with the Thai border at Huai Kone-Nam Ngeun and an East section (NR2E) (150 km) connecting with the Vietnamese border at Panghok-Tay Trang, Dien Bien Phu Province. In light of this, the Lao National Road 2 helps to achieve Lao PDR's aspiration to become a land-linked country through the development of economic corridors.

Objectives

The aim is to improve the climate resilience and strengthen the maintenance systems of NR2 by ensuring that road rehabilitation is done according to the latest climate resilience guidelines. The project is expected to bring a range of positive benefits to the local communities such as improved travel quality and reliability, increased access to social, educational and health care services, local market development of agricultural and business activities as well as more employment opportunities.

Sector(s)

• Transport - Transportation and storage

Proposed EIB finance (Approximate amount)

EUR 40 million

Total cost (Approximate amount)

EUR 173 million

Environmental aspects

An Environmental and Social Management Framework has already been prepared for the project. In line with the requirements, having confirmed that the project does not require an environmental impact assessment (EIA), the Promoter has screened out the EIA and prepared two Initial Environmental Examination (IEE), which were both submitted to the Provincial Office of Natural Resources and Environment (PONRE) of Phongsaly and Oudomxay in 2023. The two IEEs were approved by the PONRE and the required Environmental Compliance Certificates (ECCs) were issued in February 2023. µ The IEE will be assessed during appraisal along with any impact on protected areas. The Promoter will be required to verify that all investments are carried out in line with the EIB Environmental & Social (E&S) standards. The road also forms part of a section of the Asian Highway No. 13 (AH13), which is one of the east-west corridors in Southeast Asia. The NR2E connects with the Vietnamese border at Panghok-Tay Trang, Dien Bien Phu Province and NR2W connects with Thailand border at Ban Pheng Ngam and Muang Ngeun. Thus, this project aims to improve the climate resilience of the NR2E and NR2W and will contribute to Climate Adaptation objectives of Lao government, the EIB and the EU.

Procurement

The project will be procured under an Output and Performance Based Road Contracts (OPBRC), with a 10-year contract life. The procurement plan for this project will include eight contracts, namely: two consultancy contracts for works supervision of approximately €3 million each (for NR2E and NR2W sections) and six works contracts (3 packages for NR2E and 3 Packages NR2W). EIB financing includes three contracts covering for two works contract packages for NR2E and supervision contract. The works supervision contract will be procured through an international competitive bidding procedure with pre-qualification (restricted tender procedure). The works contract will be procured through an international competitive bidding procedure (open procedure) with two envelopes. The Promoter has to ensure that implementation of the contracts financed by the EIB are done in accordance with the EIB's Guide to Procurement.

Status

Under appraisal