45865 - VLP Dry Port

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Summary of Investment Information

Project Number

45865

Company Name

THANALENG DRY PORT SOLE CO.,LTD

Date SPI Disclosed

Mar 31, 2022

Country

Lao People's Democratic Republic

Region

East Asia and the Pacific

Projected Board Date

May 15, 2022

Environmental Category

B - Limited

Status

Completed

Last Updated Date

Apr 12, 2025

Department

Regional Industry - INF Asia & Pac

Industry

Infrastructure

Previous Events

Approved : May 10, 2022
Signed : Jun 7, 2022
Invested : Dec 27, 2023

Sector

Port and Harbor Operations

Additional Project Attributes

Blended Finance
Public-Private Partnerships

Project Description

The project involves the financing of development, construction and equipment costs of a dry port in Vientiane, Laos (the “Project”). The Project is being developed by Sitthi Logistic Lao Co. Ltd. (“Sitthi Logistics” or “Sponsor”), part of the Phongsavanh Group, a diversified Laotian business conglomerate. In July 2020, the government of Lao awarded a 50-year concession to Vientiane Logistics Park Co. Ltd (“VLP”), a special purpose subsidiary established by the Sponsor to develop an integrated logistics park in Vientiane, which includes development of a brownfield dry port and a multi-service logistics park. IFC's financing will be used for financing of the dry port only through Thanaleng Dry Port Sole Co. Ltd (“Project Company”), a subsidiary of VLP. The Project has been partially operational since December 2021 and is expected to be fully operational by second quarter of 2022.Once fully operational, the Project is expected to offer access to advanced logistics services including multimodality, trans-shipment and value-added services with potential cost and time savings. IFC is the mandated lead arranger for the entire debt package and also will invest quasi equity in the Project Company.

Associated Advisory Engagement

The Project was initially supported by an IFC Upstream engagement (Upstream Advisory Project ID: LAO-VLP-CSP 605755) that began in December 2020. IFC entered a Project Services Agreement with VLP and the Sponsor to support the development of the Project through inter alia: 1) strengthening the bankability of the Concession Agreement; and 2) identifying gaps relative to the IFC Performance Standards (“IFC PS”) and recommending ways to address them. In addition, IFC will extend Environment & Social (“E&S”) advisory services to help the client to address E&S related gaps.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	27.0
Equity

Development Impact

Project outcomes Stakeholder effects: IFC anticipates that the Project will support improvement in transport logistics by introducing the first international standard dry port in Laos. Laos is a landlocked country with an underdeveloped logistics services industry and with transport prices twice as high as in other Association of South East Asian Nations (ASEAN) member states. Prior to the operation of the Project, the cross-border trade in Vientiane was served by the First Friendship Bridge Checkpoint, which suffered from severe capacity constraints and with limited ability to process the increased traffic from the Laos – China Railway. The Project is expected to offer access to advanced logistics services including multimodality, trans-shipment and value-added services with potential cost and time savings. Market Creation Integration: The Project is expected to improve integration by establishing a strategic node for trade in the region, as well as setting a precedent for the remaining seven dry ports (Pursuant to art. 8 of Decree No. 513/GOL on Dry Port dated 4 August 2021, there will be a total of 9 dry ports to be constructed including Thanaleng Dry Port in Laos) to be constructed. The lack of strategic inland nodes (dry ports) to facilitate trade between Laos and its neighbors have led to sub-optimal solutions where trade not always moves through the most direct route. The Project will improve integration by helping Laos to transform from a land-locked to a land-linked country, leveraging its strategic location and provide a range of services to help improve connectivity within Laos and the ASEAN member countries, and thereby facilitating efficient and cost-effective bilateral and transit trade.

Financing structure: IFC is providing a long-term financing package, including senior and subordinate debt from IDA PSW, and a C Loan (quasi-equity), with an overall tenor of 10 years including 24 months grace period. These terms improve the viability of the Project by matching the long-term nature of revenue streams to debt service obligations. IFC thus expects the Project’s successful financial close to create a precedent in the market and provide signaling for future transactions. Resources mobilization: The Sponsor has appointed IFC as a lead arranger for the transaction and will help to arrange the full debt package of US$ 60.3 million and quasi equity investment of US$ 6 million. Knowledge, innovation, and capacity building: IFC expects to leverage its global know-how in the transport sector, and its experience in structuring Public Private Partnerships ("PPPs") in challenging environments. IFC will support the Project Company, a local sponsor, in developing and structuring the Project to international standards. Moreover, the Project has benefited from IFC Upstream engagement, with the team providing input on the Concession Agreement and contributing to a preliminary assessment of the economic viability of the Project. Standard setting: IFC will provide technical guidance to help strengthen the Project Company’s capacity to manage E&S risks in accordance with IFC PS. It will help ensure the design and implementation of a robust E&S Management Plan (ESMP) in line with international best practices to manage potential risks. The IFC Upstream work helped the Sponsor identifying gaps relative to IFC PS and recommended ways to address them. IFC will extend advisory services to further strengthen the E&S capabilities of the Sponsor and the Project Company.

E&S Category Rationale / Risks and Mitigation

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability, as it is expected to have potential adverse E&S risks and/ or impacts that are limited in scale, few in number, generally site-specific and readily addressed through mitigation measures, by adhering to good international industry practice (GIIP) procedures, guidelines, and design criteria, as described in the following sections. Key risks and issues include availability and implementation of an E&S assessment and an ESMS aligned with IFC PS 1 requirements; company’s capacity to ensure E&S performance in line with IFC PS requirements; labor and working conditions during construction and operations; government-led resettlement any grievance from project-affected people (PAP); handling of hazardous cargo; occupational health and safety (OHS) and community health and safety management.

Contacts

For Inquiries About the Project, Contact

Petroleum Trading Lao Public Company
Mr. Mark Luvant
Project Finance Director
+856 (0) 20-5555-4034
mark.lv@petrotradelaos.com
Kamphengmeuang Rd Phonthan Village, Saysettha District Vientiane Capital Lao PDR
www.petrotradelaos.com

For Inquiries and Comments About IFC, Contact

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IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

The ESRS and ESAP documents will be available at the following address; Kamphengmeuang Road, Phonthan Village, Saysettha District, Vientiane Capital, Lao PDR.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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