Who is Supplying Myanmar Junta with Aviation Fuel?

By The Irrawaddy 14 October 2022

Puma Energy, the main supplier of aviation fuel in Myanmar, announced on October 5 that it had sold its operations in the country to a locally owned company.

The midstream and retail arm of Switzerland’s Trafigura said in a statement it had signed a deal to sell its stake in Puma Energy Asia Sun (PEAS) and its minority share in National Energy Puma Aviation Services (NEPAS) to a locally owned private company, without naming the buyer.

Puma Energy is thought to have sold its stakes to its partner, Asian Sun Energy (ASE). The two firms established PEAS in 2014 to import and supply aviation fuel in Myanmar. The joint venture built Myanmar’s largest fuel storage terminal, with a capacity of 91,000m³, at Thilawa Port in Yangon. The US$100-million port opened in 2017.

Puma had owned 80 percent of the joint venture, with the ASE holding the remaining 20 percent.

ASE has been blacklisted by the parallel National Unity Government for supplying aviation fuel for junta aircraft which the regime uses to carry out air raids on civilians.

Following the military coup in February 2021, Puma initially suspended operations in Myanmar but later resumed distribution for civilian purposes.

“It has now sold its stake to exit Myanmar. It appears that it can only sell its stakes to ASE because it may need ASE’s approval to sell its stakes to a third company,” a source from a Yangon-based fuel company told The Irrawaddy.

While telecom companies that have pulled out of Myanmar are entirely foreign-owned, PEAS is a joint venture between a foreign firm and a local company, and it is therefore likely that Puma has sold its stakes to its partner, he added.

The Irrawaddy was unable to reach ASE for comment.

ASE was established in 2013 by businessman U Win Kyaw Kyaw Aung, who returned to Myanmar after studying abroad when U Thein Sein’s quasi-civilian government was inviting foreign investment. The company engages in logistics and fuel importation and distribution.

Its two other directors are Daw Kyu Kyu Myint and Daw Tharaphi Hla Myo.

U Win Kyaw Kyaw Aung lived mainly in Singapore before he returned to Myanmar. Less than one year after his return, he managed to partner with an international energy firm, Puma, while also obtaining a 50-year lease from the state-owned Myanmar Port Authority for the land to build the fuel storage terminal at Thilawa Port.

U Win Kyaw Kyaw Aung reportedly has close ties with regime crony and Ayeyar Hinthar co-owner U Zaw Win Shein and others who have won tenders from the Myanmar military’s Directorate of Procurement, a businessman with knowledge of the matter told The Irrawaddy on condition of anonymity.

“When it entered the Myanmar market, Puma chose him for fear that it might end up partnering with sanctioned companies. But [ASE] is close to the military. Today, generals do not invest in businesses run by cronies. They do any business they like by hiring frontmen,” said the businessman.

The fact that U Win Kyaw Kyaw, 38, has a low profile in business circles also makes him an ideal frontman for the generals.

In 2017, a Singapore court found U Win Kyaw Kyaw Aung, then 33, a Myanmar national with permanent residency in Singapore, guilty of hiring hitmen to kill a man suspected of adultery with his wife in 2015. The suspect fled before it could be ascertained whether he was the same man who had established ASE.

ASE has also acquired Puma’s minority share in NEPAS, sources told The Irrawaddy. NEPAS is a joint venture between Puma Energy and the state-owned Myanmar Petroleum Products Enterprise under the junta’s Ministry of Energy. It supplies aviation fuel as well as bitumen to 10 domestic airports including Yangon International Airport.

However, one source claimed that Puma’s stake in NEPAS has been acquired by 24 Petroleum. A subsidiary of 24 Hour Group, 24 Petroleum, was established in early 2021 before the coup to supply Jet A-1 fuel as well as gasoline and diesel.

Owned by U Aung Aung Zaw, 24 Hour Group bought Air KBZ and Myanmar Airways International from Kanbawza Group in late 2018.

“International airlines do not refuel here. The domestic aviation fuel market only supplies the military and domestic airlines, so only companies close to military will buy the stakes,” said the source, a businessman with knowledge of the matter.

The Irrawaddy could not obtain comment from managing directors of the Myanmar Petroleum Product Enterprise (MPPE) and Myanmar Petrochemical Enterprise under the Energy Ministry to confirm the purchase.

In August, Myanmar’s junta reconstituted a national coordination committee with the stated aim of importing, storing and distributing aviation fuel in line with international norms.

The 15-member committee consists of directors-general from the ministries of Energy, Transport and Communications, and Planning and Finances, the assistant quarter-master general, and chiefs of the flag carrier Myanmar National Airlines and private airlines including Air Thanlwin, Myanmar Airways International, Yangon Aerodrome Co, and Golden Myanmar Airline.