Home MMBIZ News Singapore Firm Secures 230MW Myanmar Power Plant Financing

Singapore Firm Secures 230MW Myanmar Power Plant Financing

Singapore-based Asiatech Energy last week signed an agreement to secure financing to build a combined cycle gas-fired power plant in Myanmar’s southeastern Mon state, the company said.

Asiatech Energy was commissioned to construct the 230-megawatt (MW) power plant in Mawlamyaing in Mon state by Myanmar Lighting IPP Co Ltd (MLC).

Singapore’s United Overseas Bank (UOB) said it will finance the project, without disclosing the loan amount to Asiatech Energy. However, several Singaporean press reports indicated that the project is worth $170 million.

MLC will own and operate the power plant and the electricity generated will be distributed by Myanmar Electrical Power Enterprise (MEPE). Once completed, the power plant will produce enough electricity to provide power to approximately 5 million people in Myanmar, the company said.

Tang Weng Fei, chairman, Asiatech Energy Pvt Ltd, said, “Asiatech is delighted to be the first Singapore company to build a combined cycle gas-fired power plant in Mon state to help serve the electrical needs of Myanmar,” where only a quarter of the population of about 60 million currently has access to electricity, according to the Asian Development Bank (ADB). Outside the main cities of Yangon, Nay Pyi Taw and Mandalay, only one in every five households is connected to the electricity grid.

“This is a significant milestone for us and UOB has been instrumental to this project by supporting us with funding from Singapore,” Tang said.

Frederick Chin, managing director and head, Group Wholesale Banking, UOB, said the financing of Asiatech Energy’s project is in line with the bank’s approach of “supporting the businesses building the infrastructure that is necessary to drive the region’s economic growth.”

“As power is essential in the creation of new industries and jobs for Myanmar,” the company is glad to partner with AsiaTech Energy to “help deliver on the country’s increasing demand for electricity,” Chin said.

The Mawlamyaing plant will be built over two phases and is expected to start producing an initial 43MW of electricity by the second quarter of 2014. The project is expected to be completed at the end of 2015.

Pouring investments in power sector

As Myanmar undergoes rapid development, the government has prioritised investment in the power sector to cope with the rising demand for reliable energy for households and businesses, and overhaul the country’s woeful power infrastructure.

Last month saw two major investments in Myanmar’s power sector with US-based APR Energy snapping a bid to develop a 100MW gas-fired plant in Mandalay, and Singapore-based Navigat Group’s subsidiary MAXpower (Thaketa) Co Ltd starting to supply power through a 50-megawatt (MW) gas-fired power plant.

The signing of the financing agreement with Asiatech Energy came only a week after UOB announced that it had partnered with APR Energy in their Myanmar power plant.

In January, the World Bank (WB) pledged $1-billion financial support to Myanmar to expand electricity generation, transmission and distribution, and the ADB agreed to provide $60 million to overhaul countrywide power infrastructure. The WB in September said it will provide a $140 million interest-free credit to install a 106MW power plant in Mon state by replacing existing gas turbines with advanced technology and provide 250 percent more electricity with the same amount of gas.

The Japan International Cooperation Agency (JICA) in June last year granted Myanmar an Official Development Assistance (ODA) loan of ¥51.052 billion ($500 million), part of which will go to rehabilitating and upgrading main power plant and substations in greater Yangon area to promote stable power supply.

Japanese trading house Mitsubishi Corp in November last year said it will build a massive ¥1 trillion ($9.7 billion) fossil-fuel-fired power station in Dawei special economic zone via a joint venture with Electricity Generating Authority of Thailand and Italian-Thai Development. The facility, which is slated to go into operation in 2015, will have a total output capacity of 7 million kilowatts.

Thailand-based Gunkul Engineering said in January that it plans to invest more than $100 million to develop gas-fired and wind power plants in Myanmar, while a multinational joint venture involving those from Myanmar, India and Singapore in October last year said they will build a 500MW coal-fired power plant in Kyauktan, Yangon region.

In September last year, Myanmar signed a memorandum of understanding with South Korea to build a 500MW plant which will use natural gas and waste to generate power, in a joint venture between Myanmar’s Hexa International Co and Korea Western Powerwill in Thaketa, Yangon region. The first phase of the project is expected to be completed in 2014.

The Ministry of Electric Power last year said it plans to carry out 17 power plant projects by 2016 – where 10 will be gas-fired and seven will be hydropower plants.

In 2012, the ministry launched two gas-fired power projects of 500MW and 120MW in Yangon’s Ahlone and Thaketa townships under respective MoUs with multinational companies involving those from South Korea, Thailand and Singapore.

Foreign direct investment (FDI) in Myanmar’s power sector had reached $19.28 billion, 43.56 percent of the total FDI, in seven projects as of the end of December 2013, making it the top foreign investment receiving sector in the coutnry.

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