Myanmar State Firm Signs Deal to Buy Electricity From Strategic Chinese Project in Rakhine
By Nan Lwin 6 November 2019
YANGON—A Myanmar state-owned enterprise has inked a power purchase agreement with a Myanmar-China joint venture company that is developing a 135-megawatt (MW) power plant project in Kyaukphyu, in western Myanmar’s Rakhine State.
The plant is one of the strategic projects that make up the Myanmar section of Beijing’s grand infrastructure plan, the Belt and Road Initiative (BRI).
The power purchase agreement (PPA) was signed on Tuesday between Electric Power Generation and Kyauk Phyu Electric Power Co. Ltd, a joint venture of Myanmar’s Supreme Group and Chinese state-owned firm Power China.
The company plans to develop a US$180-million (273.3-billion-kyat) combined cycle power plant, which will use gas from the Shwe field. The project will supply an estimated at 1,005 million units annually to Rakhine State and the national grid.
Supreme Group deputy chief executive officer U Htu Htu Aung told The Irrawaddy the company had been waiting to sign a PPA before beginning construction of the power plant.
Construction would begin soon, he said.
The Kyaukphyu project is expected to generate power by 2021 in accordance with the Myanmar Ministry of Electricity and Energy (MOEE)’s power-generation plan, he said.
According to the MOEE, Myanmar’s power demand is increasing by 1,000 MW a year. This is expected to rise to 1,588 MW by 2020.The ministry has set periodic electricity access targets through 2030. It aims for 55 percent of the population to have access to power by 2020-2021, 75 percent by 2025-2026 and 100 percent by 2030-2031.
The government and company agreed to pay in kyats for the power generated. However, U Htu Htu Aung declined to provide details of the agreement price, saying only that it is reasonable compared with other gas companies.
The MOEE granted Electric Power Generation and Kyauk Phyu Electric Power Co. Ltd a “notice to proceed” in January 2018. The companies signed a letter of acknowledgement of the conclusion of PPA negotiations with Minister for Electricity and Energy U Win Khaing on the sidelines of the Belt and Road Forum in Beijing in late April.
Myanmar state-owned media praised the project as “an important project for the Myanmar-China Economic Corridor [CMEC]”, which forms a section of the BRI.
Kyaukphyu is in a strategic location for the BRI, a signature project of Chinese President Xi Jinping. Myanmar and China signed a framework agreement on the Kyaukphyu Special Economic Zone (SEZ) in November 2018. The project gives China direct access to the Indian Ocean and allows its oil imports to bypass the Strait of Malacca.
The crucial BRI project includes a 1,000-hectare industrial park and deep seaports on Made and Yanbye islands. The park is expected to include facilities for textiles and garments, construction-materials processing, food processing, marine supply and services, pharmaceuticals, electrical and electronics goods, and research. The deep seaports will have annual capacity of 7.8 million tons of bulk cargo and 4.9 million TEU containers.
“Our project is not officially listed in the government-to-government CMEC projects list, as we are [funded] by private investment. Our [joint venture] is a fully private company. But the project is a strategic project under the CMEC,” U Htu Htu Aung said.
Myanmar and China signed a 15-point MOU for the CMEC last year.
Under the MOU, the governments agree to collaborate on projects in a number of sectors including basic infrastructure, construction, manufacturing, agriculture, transport, finance, human resources development, telecommunications, and research and technology.
The estimated 1,700-kilometer-long corridor will connect Kunming, the capital of China’s Yunnan province, to Myanmar’s major economic checkpoints—first to Mandalay in central Myanmar, and then east to Yangon and west to the Kyaukphyu SEZ.