Singpore-based Sembcorp Industries signs an agreement with Myanmar's Ministry of Electric Power to build the country's largest gas-fired power plant project at Myingyan in Mandalay Region

Singapore-based Sembcorp Industries and the Ministry of Electric Power signed an agreement yesterday, giving the Singaporean firm the green light to build Myanmar’s largest gas-fired power plant project at Myingyan in Mandalay Region.

Sempcorp was awarded the project in April following an international tender, and signed the final agreement with the ministry’s Department of Electric Power Planning yesterday, said DEPP director general U Khin Maung Win.

“They are now going to start building the project and we expect to begin generating electricity in April,” he said.

With an installed capacity of 225 megawatts, the project will eventually transmit more power to the national grid than any other independent gas-fired plant, though it will not operate at full capacity immediately, said U Khin Maung Win. “It will be built phase by phase, so we are not yet sure how many megawatts will be generated this coming April,” he said.

The International Finance Corporation under the World Bank advised the government on the project, which is estimated to cost around US$300 million.

Sembcorp will hold an 80 percent stake, while its local partner MMID Utilities will hold the remaining share, according to a company press release yesterday. MMID is incorporated in Singapore and owned by a group of Myanmar investors.

“Sembcrop is pleased to be embarking on this project, which is our first investment in Myanmar. It gives us a foothold to potentially develop other businesses in the country such as water and urban development,” said executive vice president Tan Cheng Guan, in a statement.

The project is expected to be completed in 2018 and will supply power to Myanma Electric Power Enterprise under a 22-year power purchase agreement, guaranteed by the Ministry of Electric Power. Neither Sembcorp nor the ministry has disclosed the terms of the agreement.

It will be built by Sembcorp Myingyan Power Company, which has been set up specifically for this project. Funding will be a mix of limited recourse project financing and equity, the company said. The project financing is expected to be closed in the first half of 2016. If successful, this will be one of the first project financing deals in Myanmar.

According to the IFC’s website, it is considering up to $45 million of debt financing for the plant.

The plant will be fueled by natural gas from the China-Myanmar gas pipeline which began operations in 2013, running from Kyaukphyu in Rakhine State to Yunnan province in southwest China.

In Myanmar a number of gas-fired power plants are in operation, mostly in the Yangon area. Power purchase agreements for these projects were finalised in early 2013 between local and international private companies and the government.

The country has one of the lowest per-capita electric power consumption rates in the world, at 180 kilowatt hours. However this is expected to increase by 15pc a year to reach almost 1500kWh per capita by 2030, according to the electric power ministry.

The government has set a target of 100pc electrification by 2030, while the country’s current electricity consumption is just a little over 2000MW.

Reference: http://www.mmtimes.com/index.php/business/18020-sembcorp-signs-for-gas-fired-power-plant.html

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