Tuesday, December 3, 2013

Japan to build massive Coal power plant in Myanmar

Japanese trading house Mitsubishi Corp. will build a large fossil-fuel-fired power station in Myanmar's Dawei special economic zone via a joint venture with two Thai companies.

Mitsubishi will team up with Electricity Generating and Italian-Thai Development to set up the new entity as early as next year, taking stakes of 30%, 50% and 20%. Outlays could reach 1 trillion yen ($9.85 billion). This marks the latest in a series of Myanmar infrastructure development projects spearheaded by Japanese businesses. The initiative is expected to help bolster industry in the newly democratizing Southeast Asian nation, which suffers from chronic electricity shortages.

The total output capacity of the facilities will eventually reach 7 million kilowatts (7,000 megawatts), the equivalent of seven nuclear reactors. Natural gas will likely account for 20%, with the rest, 80% coming from coal. The first facility is slated to go into operation in 2015.

To help recover investment, the plan is to supply 3 million kilowatts within the economic zone and sell the rest (approx 60%) to Thailand.

(The original planned 4,000 megawatt coal fired plant to be built by ITD, was cancelled by the Myanmar government for negative environmental impact. This new Japanese 80% coal fired power plant will be nearly twice the size with the majority of the electricity going to Thailand.)

Soonchai Kumnoonsate, governor of the Electricity Generating Authority of Thailand, told The Nikkei that the joint business in Dawei will be a symbol of three-way collaboration between Myanmar, Thailand and Japan. He expressed hope that Mitsubishi's participation will help encourage more Japanese businesses to invest in Dawei. The authority is the parent of Electricity Generating.

With Thailand facing such challenges as scarcer and costlier labor, Dawei -- located 300km west of Bangkok -- has the potential to serve as an alternative production site for manufacturers. The economic zone may also grow into a logistics hub that connects directly to India, the Middle East and Africa without having to go through the Strait of Malacca.
The Thai and Myanmar governments have established a joint entity for overseeing Dawei's development and managing the necessary financing. Port facilities, rail and communications are among the seven infrastructure fields that will be handled by affiliated companies. Mitsubishi's participation will come under the power generation sector.
Considering the enormous amount of investment needed for such projects, Thailand and Myanmar have solicited the Japanese government's participation. Three-way talks are already underway.

On the outskirts of Yangon, trading houses Mitsubishi, Sumitomo and Marubeni have led infrastructure development under an official development assistance program of the Japanese government.