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 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.

Source: Myanmar Times