MOGE owes more than US$1.6B even as domestic demand rises

Myanmar owes China more than US$1.6 billion which it borrowed on high interest to implement projects including an oil and gas pipeline, according to a Myanmar Alliance for Transparency and Accountability (MATA) statement released based on an Extractive Industries Transparency Initiative report.

It has so far repaid more in interest than the amount borrowed for projects including $243.6 million for the Yadanar-Yangon gas pipeline, $559.9 million for the Southeast Asia Natural Gas Pipeline and Shwe Offshore Natural Gas Development Project and S$ 851 million for the Southeast Asia Crude Oil Project.

Based on the data, Myanmar Oil and Gas Enterprise (MOGE) borrowed a total of $1.6 billion for construction of the pipeline infrastructure mainly to sell oil and gas produced in Myanmar to China, the report said.

Myanmar is bound by contracts drawn when domestic demand was still low to export most of its oil and gas to China.

But now that demand has risen beyond available supply, Myanmar is in fact losing money from having to import most of its natural gas requirements even gas still flows via pipeline to China.

The main reason for accepting loans from the Chinese for the pipeline to China is that the country was under US sanctions at the time, leaving it with little choice of lenders to choose from.

The country’s loan from China carries a relatively high interest rate of 4.5 percent. Myanmar began repaying its loans to China in 2015 and will continue to be indebted to the Chinese until 2031, assuming it is consistent with its repayments. Myanmar has repaid over $418 million in interest so far.

MOGE also pays taxes on the proceeds it makes from selling the gas to China, MATA said. – Translated

Source: Myanmar Times

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