Improving Roads in LAO PDR

Between Vientiane, the capital of Lao People’s Democratic Republic, and Vang Vieng, along a winding one-lane curve on National Road 13, spirit houses line the shoulder. 

The colorful houses, adorned with offerings, are believed to attract good spirits to accompany drivers safely to their destinations. Drivers who pass by honk their horns and raise their hands from their steering wheels for a quick drive-by prayer in exchange for the spirits to protect them.

The road, a key artery of the capital and a major trade and tourism route linking the northern and southern parts of Lao PDR, is in dire need of an upgrade.

“The spirit houses indicate the point where the road starts to become more dangerous,” said professional driver Sengphet Meungchanh. “Over the past 10 years, large trucks have been congesting this route while pedestrians, motorbikes, and livestock continue to use it. Safety is a real issue.”

Expanding National Road 13 is an important component in the Lao PRR government’s infrastructure agenda and expected to strengthen the country’s links with neighboring countries in the region. But work has been long delayed by budgetary limitations.

Now, the government of Lao PDR is working with the World Bank Group to implement a multimillion-dollar public-private partnership to encourage local and international developers to construct and maintain the road. IFC will provide transaction advisory support to the government to select a private investor through a competitive tender.

The project includes the improvement of safety aspects and the expansion of a 43-kilometer section along the 13N road and of a 60 kilometer section along the 13S road. The expansion is especially important considering the rapidly growing traffic numbers. By 2040, traffic is expected to exceed the capacity of Road 13 by more than two times.

In phase one of the project, IFC will carry out due diligence for the project and will present the proposed transaction structure to the government. In the second phase, which is expected to begin upon approval of the proposed transaction structure by the government, we will assist in the implementation of an open and transparent competitive bid to select a private developer for the project.

“We wish to achieve a win-win solution with a public-private partnership,” said Oulay Phadouangdeth, Director General of Planning and Cooperation Department at the Ministry of Public Works and Transport. “Mobilizing funds from the private sector will help the country meet its goals in road construction.”