Two Power Plants in Myanmar’s Biggest City Shut Amid Coup’s Financial Fallout
By The Irrawaddy 13 October 2021
Two Chinese-backed LNG (liquefied natural gas) power plants in Yangon have halted operations since July as they have become financially unsustainable, signaling that Myanmar’s commercial capital could be in for more frequent blackouts.
Among the factors behind the move are an increase in LNG prices in the international market, the depreciation of the kyat against the US dollar, a decline in electricity demand, and the regime’s inability to pay electricity suppliers, according to sources from the junta-controlled Ministry of Electricity and Energy.
The 400-megawatt (MW) LNG power plant in Yangon’s Thaketa Township has halted operations and the 350MW power plant in the Thilawa Special Economic Zone in Thanlyin on the outskirts of Yangon is only producing the 50MW needed to keep its existing LNG stocks cool, according to a ministry source.
The Thilawa power plant is operated by Hong Kong-listed VPower Co. The Thaketa plant is a joint venture between VPower and the China National Import and Export Corporation (CNTIC).
According to the electricity purchase agreement it signed with the suppliers, the ministry agreed to pay for a certain percentage of purchased units in US dollars, but it can now only pay in the Myanmar currency, the source said.
“It is mainly a financial problem. The companies have to buy LNG with US dollars. But they only get Myanmar kyats for the electricity they sell here. So, it is no longer feasible. So, they and the ministry have agreed to halt production,” the source said.
The National League for Democracy government, which was ousted by the military in a coup on Feb. 1, called for five emergency projects in 2019 after severe blackouts during the hot season. The three largest were the LNG projects in Thanlyin and Thaketa in Yangon and a 150MW plant in Kyaukphyu in Rakhine State.
All three projects were awarded to VPower and its joint venture, CNTIC, in September 2019. Their combined capacity is 900MW and the total cost of the three projects was over US$800 million.
“The companies want to halt operations as LNG prices have increased and the kyat has weakened. So, they complained that it was difficult to import LNG. And this side [the regime] doesn’t want to pay the money either. So, they have made a deal,” a local electricity supplier told The Irrawaddy.
Senior officials at the Electricity Ministry declined to answer The Irrawaddy’s questions about the suspension of production at the two LNG projects.
VPower announced in September that it had pulled out of two power projects, each with a capacity of 200MW, in Rakhine State’s Kyaukphyu and Mandalay Region’s Mingyan.
The Hong Kong firm said the contracts for those two plants expired in March and June, and it would not renew them due to the challenges that had arisen during the post-coup turmoil since February.
The suspension of the two LNG power plants in Yangon is expected to cause blackouts in the coming hot season.
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