Myanmar: Gas-fired plant in Mandalay to operate with BOT agreement

Myanmar: Gas-fired plant in Mandalay to operate with BOT agreement

The biggest gas-fired power plant, with a capacity of 225 megawatts, will
start operations in December this year in the Taungtha and Myingyan district
in Mandalay Region, a senior official from the Ministry of Electricity and
Energy (MOEE), told The Myanmar Times.

THE gas-fired plant, with a capacity of 225 megawatts, will start operations
in December this year. Chan Mya Htwe / The Myanmar TimesTHE gas-fired plant,
with a capacity of 225 megawatts, will start operations in December this
year. Chan Mya Htwe / The Myanmar Times

The project, which is estimated to involve US$300 million (K410.18 billion)
investment, is led by the Singapore-based Sembcorp, according to U Khin
Maung Win, managing director of Myanmar Electric Power Generation Enterprise
(EPGE) under the Ministry of Electricity and Energy..

The completion of the power plant project was initially planned for May
2017, but has been re-scheduled to December, he said.

The project will receive assistance from the International Finance
Corporation (IFC), according to U Khin Maung Win.

The power plant is an independent power producer (IPP). An IPP is an entity,
which is not a public utility, but which owns facilities to produce electric
power for sale to utilities and end users.

The project is also secured with a build-operate-transfer (BOT) contract. A
BOT contract is a type of arrangement in which the private sector builds and
establishes an infrastructure project, operates it and eventually transfers
ownership of the project to the government.

According to the agreement between the ministry and Sembcorp, the MOEE will
have to buy at least 85 percent of the electricity generated by the plant in
a year. However, the amount of electricity to be bought may vary depending
on the demand, U Khin Maung Win said.

The contract also stipulated that the MOEE will have to send 37.5 million
cubic feet of natural gas daily to the plant and the price for its output is
roughly $0.032 per unit if the ministry buys up to 82pc and $0.03 per unit
if it buys 100pc.

"Sembcorp's investment is estimated to be about $300 million. We don't have
that much money.

"They will leave after regaining their investment. They will continue to
carry out and initiate other projects.

"After the company has made a return from its initial investment, the state
will take over the ownership of the power plant for free. But as the
purchase price per unit is high, we suffer losses," he said.

The land where the plant is located is owned by the MOEE. Ground work for
the project began in April 2016, with construction commencing in November in
the same year.

At the moment, there are two other gas-fired power plants running in
Taungtha: a 90-MW plant operated by Glasgow-headquartered Aggreko and a
133-MW one by Hong Kong-based VPower Group.

Also, there is a 90-MW gas-fired power plant in Kyaukphyu, Rakhine State and
an 80-MW plant in Kyaukse, Mandalay Region.

The gas needed for those power plants has been supplied through the domestic
share of Myanmar in the Myanmar-China gas pipeline. Shareholders in that
pipeline are Myanmar Oil and Gas Enterprise, Chinese state-owned oil and gas
corporation China National Petroleum Corporation, South Korea's Daewoo,
India's and others.

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Link to Original Article:
http://www.mmtimes.com/index.php/business/26246-gas-fired-plant-in-mandalay-
to-operate-with-bot-agreement.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com