The poor, small Southeast Asian country of Laos is set to cede majority control of its electric grid to a Chinese company, as it struggles to stave off a potential debt default, people with direct knowledge of the agreement said. The deal comes at a time when critics accuse Beijing of “debt trap diplomacy” to gain strategic advantage in countries struggling to repay loans taken out under President Xi Jinping’s global “Belt and Road” infrastructure initiative. China is Laos’s biggest creditor, and the deal will bind the landlocked, mountainous country of seven million people closer to its giant neighbour. The power grid shareholding deal was signed on Tuesday between state-owned Electricite du Laos (EdL) and China Southern Power Grid Co., according to Chinese state news agency Xinhua, which did not give details of the new ownership. Three people with knowledge of the matter said it would give majority control of the new Electricite du Laos Transmission Company Limited (EDLT) to the Chinese company. Power exports are central to Laos’s development plans. “It will give the Laos state grid better bargaining power with regional countries and start to make a profit,” said one of the people with direct knowledge of the discussions.
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