Burma Business Roundup (Saturday, Aug. 11)

By William Boot 11 August 2012

Reports in some domestic media that Burma exported 3.3 million metric tons of rice in the four months of April-July this year are not credible, say industry experts.

Figures for annual exports in recent years have been in the 700,000 tons to 800,000 tons region and “nothing has happened in the Burmese rice growing sector in the last year to suggest anything like such an increase so quickly,” said a Bangkok industry insider who asked to remain anonymous.

Burma exported 3.32 million tons in the April-July period, said the Chinese state-owned news agency Xinhua quoting local reports, notably First Weekly News.

That compares with 778,000 tons for the whole of 2011.

On Aug. 9, Reuters quoted Ye Min Aung, secretary-general of the Myanmar Rice Industry Association, forecasting that Burma might export up to two million tons in 2013 and perhaps three million by 2015.

The Thai Rice Millers Association recently forecast that with a revived economy pumping in better quality seed, fertilizer and farming methods, Burma might be capable of reaching 2.5 million tons per year by 2015.

Up to now most of Burma’s rice for export has been low quality broken grain, bought by Bangladesh and African countries.

In the 1930s prior to World War II, Burma was the world’s biggest rice exporter shipping seven million tons a year.

That title has now been held by neighbor Thailand for a number of years, exporting over 10 million tons annually. However, both Vietnam and India are vying to export more, possibly causing a glut and lower prices in 2012-13.

Rangoon Power Plant Still One Year Away

Burma’s Ministry of Electric Power says proposals for a much-needed natural gas-fueled power station to provide more electricity for Rangoon have still to be finalized.

The South Korean construction firm BKB offered in June to build a 500-megawatt plant and the ministry said this would be accepted and expedited.

However, the ministry told local media this week that a firm agreement will be signed with BKB “later this year” and offered no timetable for development.

The ministry did confirm that the plant will be built in the former capital’s Tharkayta Township.

It is also not clear how the project will be financed. A plant of the reputed size should cost several hundred million dollars and take up to one year to complete.

Rangoon is desperately short of electricity and suffers long blackouts daily.

The whole of Burma has a generating capacity of no more than 2,000 megawatts and large sums of money will be needed to finance any extension of the grid system, which currently is confined mainly to the Rangoon-Mandalay corridor.

Central Burma Onshore Drilling Taps More Oil

More oil has been struck in central Burma by Singapore-based Interra Resources’ subsidiary Goldpetrol.

Interra said new drilling in the Chauk field, which is linked with the ageing Yenangyaung field dating back to the 1930s, has struck oil in its CHK 1164 development well. The strike was made at a depth of 2,281 feet.

Interra said on Aug. 6 that it had also begun new drilling in the Yenangyaung field in a bid to revive output under an Improved Petroleum Recovery Contract it has with the state-controlled Myanmar Oil and Gas Enterprise.

Interra has previously announced other oil strikes, all small, in the Yenangyaung field area.

Burma’s oil and gas sector was the biggest segment of an overall US $408 million invested in the country during the first five months of 2012, according to government figures published this week.

Of that total, $366 million went into 20 oil and gas projects.

The Ministry of Energy has said it will offer as many as 40 new onshore and offshore blocks licenses during an industry promotion forum to be held in Rangoon in the first week of September.

Hydro Dam Bid to Solve Dawei Power Problem

Ground clearance work has begun at the site of a planned hydropower dam to feed electricity to the proposed port and industrial complex at Dawei (Tavoy) on Burma’s southeast coast.

The 800-megawatt project is expected to replace the 4,000-megawatt coal-fuelled power station originally planned by port developer Italian-Thai Development (ITD).

The coal-powered plant was cancelled by the Naypidaw government on environment grounds.

Villagers in the dam’s flood path on the Tanintharyi River several kilometers inland from the coast report that engineers and surveyors have been active in the area, domestic media reported this week.

Chief developer ITD, based in Bangkok, has promised to properly compensate villagers forced to move.

If the full ITD port plan —involving oil transshipment docks and a petrochemicals complex—goes ahead it will cover a coastal area measuring 250 square kilometers, ITD has said.

The massive special economic zone project has been held up by funding problems at ITD, which it trying to attract investment from Japan, South Korea and other regional countries.

Pepsi Set to Quench Burma Ahead of Coca Cola

The Pepsi soft drinks brand could beat rival Coca Cola in returning to Burma after an absence by both US firms of many years.

Coca Cola announced plans in June to resume trading in Burma—one of only three countries in which it has no presence. However, little has happened since and in mid-July the president of Coca-Cola’s Asean Business Unit, Manuel Arroyo, said the firm was still only at the “very embryonic stage” and it would be many months before it completed a search for a suitable local partner.

Pepsi on the other hand announced on Thursday that it had reached an agreement with Diamond Star Company, part of Burma’s Capital Diamond Star Group, to distribute Pepsi, 7-Up and Miranda.

Rangoon-based Diamond is involved in construction, flour milling and property. Coca Cola quit Burma decades ago while Pepsi stopped selling there in 1997.