Hanthawaddy Airport Contract Goes to Singaporean-Japanese Consortium
By Thit Nay Moe 30 October 2014
RANGOON — A Japanese-Singaporean joint venture has won the contract to build the US$1.5 billion Hanthawaddy International Airport north of Rangoon, according to Win Swe Tun, director-general of Burma’s Civil Aviation Department.
The winner—a consortium comprised of Singaporean firms Yongnam Holdings Ltd. and Changi Airport Planners and Engineers (CAPE), as well as Japan’s JGC Corporation—was announced at a press conference about the project at the Aerospace Engineering University in Rangoon on Wednesday.
The contract for the airport was put out to tender in February 2013 for the first time, but was retendered a year later after the Burmese government was unhappy with the terms proposed by the initial tender winner.
Incheon Airport Consortium, a South Korean conglomerate, won the first tender in August 2013, but negotiations on lending terms for the project broke down and the government rescinded the contract.
Incheon had estimated the value of the project at more than US$1.5 billion, and said it would apply for a loan of more than $1 billion, nearly 70 percent of the project’s value, with an interest rate of more than 7 percent. The Korean consortium planned to implement the project on condition that the Burmese government agreed to put up collateral on behalf of Incheon to guarantee the loan.
The Yongnam-CAPE-JGC Consortium has estimated the project value at about $1.45 billion and said it would request a loan of $706 million, at a low interest rate from the Japanese government’s aid arm, the Japan International Cooperation Agency (JICA). The consortium will seek another $517 million loan at an interest rate of 4 percent from private lenders, investing $222 million of its own money to implement the project. The consortium has not asked the Burmese government to put up collateral on behalf of them to get the loans.
The DCA director-general on Wednesday said the latter’s offer was more attractive to the Burmese government.
“Comparing the two, Incheon wants the Burmese government to put up collateral. But the government can’t do so for a private company. So, the deal was cancelled and we selected Yongnam,” Win Swe Tun said.
“Yongnam said it would take around four years to construct the airport and the airport can begin operating in December 2019,” he added.
Hanthawaddy International Airport will be located at the site of an old airport near the town of Pegu, about 50 miles north of Rangoon.
Rangoon International Airport lacks available space for a major expansion and the government says a new international airport is needed as the country hosts growing numbers of tourists and businesspeople.
Upon completion, Hanthawaddy International Airport will have the capacity to handle 12 million travelers a year. Rangoon International Airport is also being upgraded, and will be able to handle up to six million travelers a year when complete.