Burma

Kyaukphyu SEZ Winners to be Announced in February

By Kyaw Hsu Mon 19 January 2015

RANGOON — Announcement of winning tenders for the development of a special economic zone in western Burma will be delayed until late February, the project’s oversight committee has announced, claiming that they need to retrieve additional information about the bidders amid accusations of an opaque and unfair selection process.

“We’ve seen that we need to ask for more detail while we interview bidders, that’s why we need to take some more time,” said Aung Kya Than, secretary of the Kyaukphyu SEZ Bid Evaluation and Awarding Committee. “We will announce the winning bids in late February… We can’t say how many international and local firms are included in the final stage,” he added.

The Kyaukphyu SEZ is one of three special economic zones planned for Burma’s ports, and will serve as the terminus for parallel gas and oil pipelines reaching from the Arakan State coast on the Bay of Bengal to Yunnan, China. Both pipelines—which have been a source of controversy since plans were approved in 2007—were completed within the past two years.

The zone is expected to envelop an already built deep sea port, a petrochemical processing plant, an energy facility and a variety of industrial factories.

The Burmese government called for infrastructure tenders in September 2014, after awarding a US$2.5 million consulting contract to Singaporean CPG Corporation in March. Bidding for infrastructure contracts closed on Nov. 24.

A total of 12 companies submitted bids; 11 foreign and one local firm. Three of those 12 will be awarded contracts, the tender selection board told The Irrawaddy. Those three winners were initially expected to be announced in January 2015, a deadline that had to be pushed back to carry out additional probes into potential investors, the committee said.

The committee’s reluctance to disclose the names of shortlisted bidders, however, has led to claims that the process lacks transparency and favors Chinese clients, who accounted for the bulk of bids and are the primary beneficiaries of the gas and oil corridor.

Pyi Wa Tun, Chairman of the Parami Energy Group of Companies, said the lack of domestic bidders is suspicious, as his was the sole bid on the development submitted by a Burmese firm.

“I expected that there would be many local companies vying to work with international firms, but that didn’t happen,” he said. “If the best international firms will work with us, it can be built fast and we will get more benefit. It shouldn’t be only for Chinese companies.”

Pyi Wa Tun said that China’s CITIC Group is expected to be among the winning bidders, but the committee could not confirm this projection. CITIC has been a known contender for the project, having produced a feasibility study in May 2011 that estimated project costs at $14 billion and a land planning area of about 350 square kilometers (217 square miles).

“From what I understand,” Secretary Aung Kyaw Than countered, “people are criticizing us for favoring Chinese companies. There might be something driving those allegations, or some political motivation. But for us, we are only looking out for the country’s interests.”

The Kyaukphyu SEZ is a key feature of the gas and oil corridor, which transfers gas sourced from the Bay of Bengal and oil shipped from the Middle East and Africa into China’s isolated southwestern provinces. The overland shipments of crude could eventually save China millions by avoiding long and costly tanker routes through the Malacca Strait.

The corridor, which cuts through Burma diagonally passing through Mandalay and parts of conflict-affected northern Shan State before entering China through Muse, also creates convenient shipping hubs for India and Bangladesh, as they will be linked to Mandalay via a proposed tri-lateral highway connecting northeast India to Thailand.

The project has faced opposition from villagers in Burma and China, primarily because of the amount of land required for related developments. The Kyaukphyu SEZ is expected to take up an initial 1,000 acres of land and later swell to about 4,000, according to comments made last year by the tender selection committee Chairman Myint Thein.

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