Singapore's Navigat creates blueprint for future Myanmar power deals

YANGON Mon Feb 17, 2014 1:31am EST

YANGON Feb 17 (Reuters) - A subsidiary of Singapore-based Navigat Group said on Monday it had begun supplying power under a purchasing agreement that will be the template for future deals by Myanmar, which has one of the lowest electrification rates in Asia.

MAXpower (Thaketa) Co Ltd said it spent $35 million building a 50MW gas-fired plant in a suburb of the main city, Yangon, becoming the first entirely foreign-owned company to enter a long-term power purchasing agreement with the government.

Navigat CFO Arno Hendriks told Reuters the deal stemmed from a 2012 meeting with government officials and was negotiated directly with the state-owned Myanmar Electric Power Enterprise (MEPE).

Hendriks said it was a "lengthy process" for the government to formulate the agreement with help from the Asian Development Bank, but the agreement will now be used as the basis for future deals. The government agreed.

"We see it as a blueprint for other initiatives to develop the electricity sector across Myanmar," MEPE managing director Htein Lwin said in a statement.

In a report last year, the World Economic Forum said increasing electricity supplies was key to boosting Myanmar's economy, which stagnated under decades of military dictatorship until a quasi-civilian government took over in 2011.

"Myanmar is trying to develop large hydropower plants," said Hendriks. "In the meantime, there is an urgent need for power for citizens, but also for industry."

He said hydropower projects would take a minimum of five years to come online, while his company could build smaller gas-fired plants within six months.

Despite having abundant natural gas and hydropower potential, only about 26 percent of Myanmar's 60 million people have access to electricity, among the lowest rates in Asia, according to an October 2012 Asian Development Bank report.

The Ministry of Electric Power plans to complete 17 power plant projects between 2013 and 2016, according to a ministry presentation to the Japanese International Cooperation Agency in July 2013. Of those, seven will be hydropower and the rest gas.

On Feb. 12, APR Energy PLC announced it had won a bid to develop a gas-fired plant with 100 MW capacity in the Mandalay region of central Myanmar. APR, which is based in Jacksonville, Florida, said it was the first American company to sign a power generation contract with Myanmar since the United States lifted sanctions on the country in 2013.

Hendricks said his company hoped to sign an agreement to develop another 50 MW power plant in 2014 and was in discussions with General Electric Co to secure the Myanmar distribution licence for its gas engines, which it distributes in Thailand, Singapore and Indonesia.