Legality of Mon State Cement Factory’s Power Plant Questioned

By Hintharnee 17 August 2017

MAWLAMYINE, Mon State — A controversial 500-ton cement factory in Mon State’s Kyaikmayaw Township has not sought permission from the Ministry of Electricity and Energy in order to generate power, according to the ministry.

The US$400 million cement factory run by Mawlamyine Cement Limited (MCL) – a joint venture between Thai firm Siam Cement Group (SCG) and Pacific Link Cement Industries—is powered by a 49-megawatt coal-fired power plant.

The committee for the assessment of financial, planning and economic matters in the Mon State Parliament asked the Ministry of Electricity and Energy in a letter on August 7 about the coal-fired power facilities the cement factory.

The ministry replied on August 14 that MCL had not sought permission to run the power plant.

“From the ministry’s reply, we can confirm that MCL didn’t follow the electricity law. They did discuss with the ministry the installation of two 20-megawatt turbines. But they didn’t get any permission,” U Aung Kyaw Thu, chairman of the Mon State parliamentary committee, told the press on Wednesday.

However, executive officer U Zaw Lwin Oo of MCL said at a public consultation meeting on Thursday that MCL had in fact received permission from the Ministry of Industry to generate 20 megawatts of electricity.

“The industry ministry has given its approval for the production of 20 megawatts. It gave permission on March 19, 2017. If you have any questions, please ask the concerned ministries. We can only operate with permission,” U Zaw Lwin Oo told the press.

According to him, MCL has two 20-megawatt turbines and a 9-megawatt spare turbine, but the industry ministry has only given approval for 20 megawatts; the cement factory is powered by a single 20-megawatt turbine.

According to Myanmar Investment Commission, MCL signed the contract in March 2013 with the previous government to operate the cement factory for next 45 years. According to the proposal from MCL, the factory’s estimated annual income is 159.8 billion kyats, expenditures are 127.23 billion kyats, and net profit is 32.57 billion kyats per year, and it will take around nine-and-a-half years for the company to break even.

On April 5, the President’s Office sought remarks from the Ministry of Electricity and Energy about the MCL cement factory’s coal-fired power plant.

The ministry remarked that the cement factory needed the approval of the government because it had installed an electricity capacity of at least 40 megawatts. According to the 2008 Constitution, heavy-scale electricity production—classified as 30 megawatts and above—needs the approval of the Union government.

Dr. Aung Naing Oo, deputy speaker of the Mon State Parliament, said that he personally welcomed the MCL’s investment in the state, but that its procedures are less transparent than he would like them to be.

“We should welcome investments. But at the same time, we need to see if those investments are legal and serve the stated purposes. Anyway, if there is no permission under the electricity law, the factory should not operate,” he told The Irrawaddy.

The factory started commercial operations in April despite local opposition. On Feb. 18, around 7,000 locals from seven villages near the factory staged a protest against the coal-fired power plant. In April last year, locals sent a petition with 3,780 signatures to the President’s Office, demanding the termination of the project.

Mon State minister for electricity, energy and industry Min Htan Aung Han told the Mon State Parliament in June that since MCL started its project three years ago, it had spent 62 million kyats on corporate social responsibility work in 2014, 1.6 billion kyats in 2015, 323 million kyats in 2016 and 338 million kyats in 2017.