VPower, a Hong Kong-listed power generation company, has announced that it is pulling out of two projects in Myanmar.
The company, which has a stake in nine power plants across Myanmar, said it will not be renewing the contracts for power stations in Kyaukphyu Township, Rakhine State, and Myingyan Township in Mandalay Region.
Each project can produce 200 megawatts and the contracts expired in March and June. The company said the decision came after it faced challenging times amid post-coup turmoil since February.
Deputy permanent secretary U Soe Myint of the junta-controlled Electricity and Energy Ministry declined to disclose details, saying the ministry was still discussing details with the company.
“[Foreign companies] entered Myanmar market expecting an influx of FDI [foreign direct investment] because of economic reforms in Myanmar. But there can’t be demand now and they are therefore leaving the country,” a director of an electricity provider in Myanmar told The Irrawaddy on condition of anonymity.
While cash shortages caused by the banking crisis following the February coup have created huge problems for foreign companies, the ministry is short of funds to pay electricity suppliers, he said.
“In electricity supply contracts, there are terms and conditions such as specifying the units the supplier has to provide and the buyer has to buy in a certain period. But now, the military council can’t afford to buy additional units and can’t even pay for the units it has purchased,” he said,” he said.
As part of the wider civil disobedience movement against the military regime, Myanmar’s consumers have withheld payments to the junta, including taxes and utility bills.
The ousted National League for Democracy government invited bids in 2019 to address the electricity shortage during Myanmar’s hot season when hydropower plants cannot run at full capacity. Hydropower is Myanmar’s main source of energy.
The joint venture between VPower and the state-owned China National Technical Import and Export Corporation (CNTIC) won three projects worth US$800 million with a combined capacity of 900 megawatts.
They include the 150-megawatt plant built near the Kyaukphyu deep-sea port project, which is a crucial part of China’s Belt and Road Initiative, and the 400-megawatt gas-powered plant in Thaketa and 350-megawatt power plant in Thanlyin, which are both in Yangon.
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