Hong Kong-listed VPower Group has set up a 50-50 joint venture with a Chinese state firm to develop three power plants in Myanmar as part of the government’s bid to stop power cuts this year.
VPower, which enjoys close links with investment bank CITIC, and state-owned China National Technical Import & Export Corporation (CNTIC) will jointly develop and operate liquefied natural gas power plants in Rakhine’s Kyaukphyu and Yangon’s Thanlyin and Thaketa townships, totalling 900 megawatts.
“Joining hands with CNTIC for the addition of 900MW generation capacity, we expect that these projects will further alleviate local power deficit to support local economic development and enhance people’s living standard,” said VPower CEO Rorce Au-Yeung.
Yanming Wang, CNTIC Vice President, said this marks the first investment of the state firm in Mynamar fast-track power generation.
The fast track solutions that could see operation within weeks and months are in response to the tight deadline set by the Myanmar government, he added.
The Ministry of Electricity and Energy’s Electric Power Generation Enterprise initiated a tender of five power projects, amounting to 1040MW, last June. The so-called “emergency power tender”, however, faced widespread criticism, not least because of the 210-day implementation deadline and a K300 million penalty per day for delay.
VPower Group last September secured four of the five tenders, including the three projects and one 20MW pipeline natural gas power project in Ayeyarwady’s Kyun Chaung. The fifth one of 120MW in Yangon’s Ahlone township went to a consortium led by China Energy Engineering Group (CEEC), known as EnergyChina.
The tender rush was a result of Daw Aung San Suu Kyi’s government’s failure in materialising private sector interest into added power capacity amid growing demand. Domestic consumption is estimated to be increasing at a rate of 15-17pc every year with the current power generation capacity at around 3600MW now.
Last year’s hot season saw a shortage of 600MW. To fill the gap and provide the additional 12.6GW by 2030, at least US$2 billion per year of investments are needed, according to estimates by the World Bank.
While all five emergency projects are slated to commence operation in the first half of 2020, the Myanmar government has yet to announce that it has signed a power-purchase agreement.
