S embcorp Utilities and MMID Utilities signed a Memorandum of Agreement with the Department of Electric Power (“DEP”), under the Ministry of Electric Power of Myanmar (“MOEP”), to build and operate a 225-megawatt gas-fired power plant near Myingyan. The agreement was signed with the consortium of Sembcorp Utilities, a wholly-owned subsidiary of Sembcorp Industries, and MMID Utilities (“Consortium”).
The Consortium has, in April this year, received the notice of award to develop and operate the US$300 million power plant, which is set to be the largest gas-fired independent power plant in Myanmar. The plant will utilise the most efficient technologies, maximising power output while minimising emissions. The site of the power plant is located in Taungtha, a township of Myingyan District in Mandalay Division.
When completed, the power plant will help to ease the country’s power deficit and meet the growth in electricity demand, which is expected to increase at a compounded annual growth rate of 13% over the next 15 years, according to Government estimates. Buoyed by investor optimism and improved business confidence, Myanmar’s economy is forecasted to grow at 8.3% in 2015 and 8.2% in 2016, resulting in power demand to rise significantly.
The build-operate-transfer project was awarded after an international bidding process called by Myanma Electric Power Enterprise (“MEPE”), a state own enterprise under MOEP, and advised by International Finance Corporation of the World Bank Group. Sembcorp will have an 80% stake in this project, while MMID Utilities will hold the remaining 20%. Expected to be completed in 2018, the project will supply power to MEPE under a 22-year power purchase agreement (PPA), with MOEP guaranteeing MEPE’s obligations under the PPA.
The total project investment of approximately US$300 million is expected to be funded through a mix of limited recourse project financing and equity. Financial close of the project is expected in the first quarter of 2016, and construction of the plant is expected to start by the end of 2015.
Mr Tan Cheng Guan, Executive Vice President & Head of Group Business Development & Commercial of Sembcorp Industries, said: “Sembcorp is pleased to be embarking on this project, which is our first investment in Myanmar. This new facility will provide a reliable source of power which is integral to the country’s economic development. We look forward to working with MOEP and MMID Utilities to deliver this project successfully. At the same time, we will also work closely with MOEP on capacity building and other corporate social responsibility initiatives, in line with the Sembcorp Group’s strong commitment to act as a responsible business and make a positive impact on our communities.”
Kyaw Paing, Chairman of MMID Utilities, said: “This is the first open and transparent Independent Power Provider (IPP) tender in Myanmar managed by International Finance Corporation (“IFC”) and attracted many international power players. We are proud to partner with Sembcorp and are confident that a power plant of international standard will be built to provide much needed electricity to our country soon.”
About Sembcorp Industries
Sembcorp Industries is a leading energy, water and marine group operating across six continents worldwide. With facilities of over 8,200 megawatts of gross power capacity and over nine million cubic metres of water per day in operation and under development, Sembcorp is a trusted provider of essential energy and water solutions to both industrial and municipal customers. It is also a world leader in marine and offshore engineering as well as an established brand name in urban development.
The Group has total assets of over S$18 billion and employs over 8,000 employees. Listed on the main board of the Singapore Exchange, it is a component stock of the Straits Times Index and several MSCI and FTSE indices.
About MMID Utilities Pte Ltd
A Singapore incorporated company set up for the purpose of investing in infrastructure and utilities related businesses in the Republic of the Union of Myanmar. The Directors of MMID Utilities are established and prominent businessmen based in Myanmar as well as investors from Singapore.
