Client Alert: Japanese Seek Entry into Myanmar Energy Sector, But How?

JOI and JBIC Supported VDB Loi Workshop in Tokyo Discusses Upcoming Energy and Infrastructure Deal Pipeline

On 15 March, VDB Loi’s Edwin Vanderbruggen and Satoshi Mitsukuri presented a uniquely practical update on Myanmar energy and infrastructure projects. The briefing was sponsored by the Japan Institute for Overseas Investment (“JOI”) and supported by the Japan Bank for International Cooperation (“JBIC”), where the briefing took place.  Nearly 200 executives from a wide range of Japanese international businesses attended the briefing.

Edwin began by giving a list of power projects in various stages of approval, newly signed PPAs and projects heading towards financial close. He also explained the Government’s interest in creating a new policy for sovereign guarantees, and area where VDB Loi is actively working with the Ministry of Planning and Finance. As is illustrated by one far advanced international project financing in the power sector, and around a dozen completed deals mostly in telecoms, the security package available in Myanmar is mostly comparable to those available in more developed Asian economies, including security on land rights.

One can sense a move towards decentralization in Myanmar, including in the electricity and infrastructure sector. The states and region are taking up more responsibility for power projects, including large scale.  This includes a preliminary plan to allow more private sector involvement in transmission and distribution.

Gas to power received much attention from the participants, many of whom are waiting for the MOGE’s large LNG tender. The World Bank has already assisted with a location study covering 3 sites, and a METI study identified a maritime site 60km off Yangon. Edwin explained that progress is slow, but that the MOGE still hopes to put out an RFP by May.

In the hydropower sector Edwin provided a list of MOUs and MOAs for projects in the various states. Most if not all planned projects are facing delays due to social issues. A new IFC-supported Hydropower Developers Working Group has been created and is exploring the idea of a sector wide PPA.

Two major solar projects were discussed, and a few are still in the pipeline. The tariff and other commercial terms were explained and compared, as well as land lease fee cost.

The briefing also covered import and distribution of fuel and water projects.