Confusion arises on settlement of gas debts in Tanintharyi region

Global Grand Services Co Ltd (GGS), which distributes electricity produced from natural gas in Tanintharyi Region, owes billions of kyat to the Ministry of Electricity and Energy (MOEE), an official of the ministry has told The Myanmar Times.

Some two million cubic feet (56,600 cubic metres) of natural gas is provided daily to GGS with the approval of Tanintharyi Region government, Deputy Minister of Electricity and Energy Dr Tun Naing said at the Pyidaungsu Hluttaw, last week.

On January 24, a complaint letter asking that Tanintharyi Region Chief Minister Daw Lae Lae Maw be investigated for alleged corrupt practices was sent to the National League for Democracy. Among the allegations included in the complaint is that her personal assistant’s husband serves as a senior official of GGS.

The complaint sent to the NLD went on to claim that the Tanintharyi Region government has many weaknesses resulting in it failing to pay the MOEE for natural gas provided.

The Tanintharyi Region government had requested that the MOEE assist in providing the region with more electricity, after which an agreement with the regional and Union governments was inked for the sale of the gas.

The regional government then provided the gas to GGS to produce and distribute electricity, The Myanmar Times understands.

An MOEE official said that under the arrangement, the regional government was expected to pay for the gas. “We sent the gas to Tanintharyi Region as the regional government said it would manage its use. We expect payment, but GGS is a matter for the Tanintharyi Region government to deal with. We can cut gas supply right now because there has been no payment for the gas,” the ministry official said.

He added though that “if we do so, however, the generators will stop and people and businesses there will suffer. From a social and economic standpoint, problems could occur due to the problem.” If the MOEE had signed the contract directly with GGS, the ministry would have stopped supplying gas as soon as the company failed to pay, the official said. But there is no contract between MOEE and GGS.

“There are many things that have to be determined now – when will the company pay, who will take responsibility, should we stop selling gas, who will take action against the company, who will take action against the regional government if it is to be held accountable,” he said, adding that the MOEE has to buy the gas at the market price before reselling it to Tanintharyi Region, he said.

But U Kyi Hlaing, Tanintharyi Region’s minister for Electricity and Energy told Myanmar Times that the regional government merely issued the relevant permit and licence agreements to GGS, adding that there is no exact mention in the contract signed between the Tanintharyi Region government and GGS on the terms for electricity payment

“We just gave the company the permit for power generation and distribution. In terms of gas supply and payments, the company should deal directly with the Union government,” he said. However, he admitted there is no agreement on the payment terms between GGS and the government.

GGS started its gas-to-electricity distribution business in Dawei at the end of 2016. It receives around two million cubic feet of gas per day from which electricity is produced and sold at K200 per unit in the region, U Kyi Hlaing said.

Around two years after starting the business, GGS had accumulated up to K10 billion worth of gas debts owed to the MOEE. It has so far paid only K1.3 billion. The remaining debt is more than K8 billion, said U Kyi Hlaing.

“We urged the firm to pay for the gas charges. But they said the price of gas had risen and delayed payment while negotiating with the MOEE to reduce the charges,” he said.

So far, the Tanintharyi Region government has no plan to take action against GGS but will consider doing so depending on the outcome of negotiations between the MOEE and the company, U Kyi Hlaing said.

“We heard that the Union will file a law suit if they do not receive payment for the gas provided within the stipulated period. If we take action against GGS, according to the contract, it might result in the inability of the company to generate sufficient electricity for the region,” he said.


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