Chinese Firms Stalling on Myanmar Solar Power Projects
By The Irrawaddy 25 January 2022
Myanmar’s military regime is not pushing enough or not pushing at all the Chinese firms who are contracted to start solar power production, despite the fact that they are several months behind schedule, said critics.
In May 2020, the now-ousted National League for Democracy (NLD) government invited bids for the construction of 29 ground-mounted solar projects capable of generating a total of 1 gigawatt of power under a 20-year build, operate and own contract.
The minimum investment was set at US$20 million (25.8 billion kyats) per site, with each project expected to generate 30 to 40 megawatts of electricity. The proposed sites are in Ayeyarwady, Bago, Magwe, Mandalay, Sagaing, Naypyitaw and Yangon regions.
Chinese companies and their consortia won the bids to build 28 out of 29 solar power plants, according to the results released by the Ministry of Electricity and Energy (MOEE) in September 2020.
The companies were set to start operations within six months under the agreements. However, the Myanmar military seized power from the NLD government in a February coup last year while the bidders were in the final phase to sign power purchase agreements with the MOEE.
The Chinese firms have since postponed signing the power purchase agreements, and only one agreement has so far been signed, according to MOEE sources.
The sources suggested that the Chinese firms might have concerns because some of the proposed solar power sites are in Sagaing and Magwe regions, where clashes between junta troops and resistance groups are intensifying, while others are located in Naypyitaw, Yangon, Mandalay and Bago regions, where there have been attacks on military regime targets.
Anti-Chinese sentiment has swelled in Myanmar since the coup with many people believing that Beijing had a hand in the military takeover. The military regime has been forced to provide certain Chinese investments in Myanmar, including the Sino-Myanmar oil and gas pipelines, with enhanced security.
According to the power purchase agreements, companies are liable to pay fines of 100,000 kyats per day if they fail to launch operations 180 days after they received the letter of agreement from the relevant ministries, The companies received the agreements in October 2020, according to a power company owner from Yangon who took part in the bidding.
Chinese companies are already nearly 16 months behind the agreed schedule, and it is not clear if they are paying the fines. Companies were also required to place a deposit of US$500,000 (888 million kyats) with the Myanmar Foreign Trade Bank after they won the tenders.
At the time of the agreements, the Chinese companies offered to sell electricity at prices between 3.5 and 5.1 US cents (45-65 kyats then) for 1 kilowatt of electricity, a rate much lower than those quoted by other regional and western companies.
“They prices they offered were too low [to make profits]. As their businesses can’t be commercially viable at those prices, they don’t want to start the businesses and thus are giving this or that excuse. And the electricity ministry has reached an understanding with them to ignore it, I think,” said the Yangon businessman.
The Irrawaddy’s calls to officials of the junta-controlled MOEE went unanswered.
Earlier this month, the MOEE said there could be frequent power outages because liquefied natural gas power plants have suspended operations, because of maintenance work at the Yadanar offshore natural gas project and alleged attacks on electricity pylons.
Myanmar’s maximum electricity capacity is 4,200 megawatts. For the time being, only two-thirds of that is being achieved, according to the MOEE.
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