Myanmar’s military regime is seeking to evade tighter Western sanctions on dollar transactions and aviation fuel imports by handing a large chunk of oil storage and distribution operations to a subsidiary of the junta-friendly Kanbawza (KBZ) Group of Companies.
Brighter Energy’s oil port and storage terminal sits on land owned by the military’s Myanma Economic Corporation (MEC) in Kyauktan Township, on the edge of the commercial capital Yangon.
Construction of the terminal began in 2019, with the military receiving a yearly rent of US$ 1.7 million, then $ 800,000 per year upon completion of the project, according to leaked report by Bright Energy Co.
Though delayed by the post-coup turmoil, construction was completed in March this year and the port is now ready to begin operations, according to the report viewed by The Irrawaddy.
The project comprises a port, a jetty, and 15 fuel storage tanks with a capacity of 100 million liters of diesel and octane, and 4,500 metric tons of liquefied petroleum gas (LPG) used for cooking.
Satellite photos confirm that the project is largely complete. The military-owned MEC has leased out the 168.5-acre plot to Brighter Energy Co for 50 years under a build-operate-transfer (BOT) contract. The MEC has been sanctioned by the United States, UK, Canada and EU.
Brighter Energy Co has been granted a permit to import 30,000 tonnes of fuel per month, a businessman familiar with the matter told The Irrawaddy.
“Brighter Energy received that import share thanks to ties between Senior General Min Aung Hlaing and [KBZ owner] U Aung Ko Win. Even Asia Sun Co got a quota of 10,000 tonnes. That quota may include aviation fuel,” said the businessman.
Asia Sun Co is owned by crony tycoon U Zaw Min Tun and was slapped with US sanctions in August for supplying aviation fuel to the Myanmar military.
Brighter Energy Co was established by KBZ Group of Companies in 2017. The company’s board of directors at the time included Nang Lang Kham, who is a daughter of Aung Ko Win, KBZ’s executive director Moe Hsan Aung, and Jasmine Palace Group owner Kaung San, according to the website of Opencorporates.
In 2019, Brighter Energy Co established a joint venture with a subsidiary of Thailand’s state-owned energy giant PTT. The subsidiary, PTT Oil and Retail Business (PTTOR), holds a 35 percent stake. The joint venture agreed to invest $ 185 million in the fuel storage terminal, and over $ 20 million for filling stations.
Of the remaining 65 percent stake, KBZ held 35 percent, and Kaung San and Min Khant, whose family owns the Myanmar Alinkar Group of Companies owned by Hsan Naung, held 15 percent each.
In February last year, KBZ announced its withdrawal from Brighter Energy but did not say to whom it had sold its shares. Myanmar Alinkar Group later said it had bought KBZ’s shares.
The regime began imposing quotas on importers of fuel, including aviation fuel, late last year. Fuel importers are required to inform the Foreign Exchange Supervisory Committee about the quantity of fuel they plan to import and the amount of US dollars required. Importers must also gain approval from the committee – which is headed by Lieutenant-General Moe Myint Tun, who sits on the junta’s administrative body, the State Administration Council – to import fuel according to the quota set by the committee.
The quota granted to Brighter Energy Co accounts for nearly 10 percent of Myanmar’s total monthly fuel imports of 350,000 to 500,000 tonnes, a fuel importer told The Irrawaddy.
“KBZ will import fuel to supply the military as it offers a more stable market than the retail market. KBZ previously only operated filling stations but now has its own storage facilities,” he said.
KBZ operates Nilar Yoma filling stations under Nilar Yoma Trading Co, established in 2001.
Nilar Yoma’s filling-station operation is less successful than its rivals, the importer added.
Background of Brighter Energy and oil port
The joint venture was unveiled in June 2019. At a press conference that same month, PTTOR and KBZ officials announced that Nilar Yoma filling stations would be rebranded as PTT and include the Thai multinational’s Café Amazon outlets.
However, the COVID-19 pandemic and 2021 military coup threw the project off course.
In February last year, KBZ pulled out of Brighter Energy. In December, PTTOR suspended Myanmar oil transport and storage operations following pressure from one of its investors, Norway’s Government Pension Fund Global, one of the world’s largest sovereign wealth funds.
The suspension came amid calls from international human rights groups for the Thai state-owned energy giant to suspend payments from joint ventures to the regime.
Myanmar Alinkar Group has said it has taken over Brighter Energy. But it is not clear if there are other shareholders.
Among the subsidiaries of Myanmar Alinkar Group are Jasmine Palace Construction Co and Brighter Energy Co. Its board of directors features Hsan Naung and his wife Sabel Aung, their two sons Kaung San and Min Khant, as well as Nyi Naing Aung and Thet Khine Oo, according to the Directorate of Investment and Company Administration.
Hsan Naung also sits on a regime committee formed in August last year to import fuel from Russia. The committee is led by Myanmar Economic Corporation chairman Lieutenant-General Nyo Saw.
The Irrawaddy was unable to obtain comment from Brighter Energy Co.
