January 10, 2012 / 4:20 AM / 8 years ago

Myanmar scraps coal-fired power plant at Dawei

YANGON, Jan 10 (Reuters) - Myanmar’s government has decided to stop the construction of a 4,000 megawatt coal-fired power plant at the Dawei Special Industrial Zone, a project of Thailand’s Italian-Thai Development Pcl, due to concerns about the environment, a minister said.

“We made the decision to halt this project after reading the concerns about the environmental impact of this plant in local media reports,” Khin Maung Soe, one of Myanmar’s energy ministers, told reporters at a briefing in Yangon on Monday.

The government still has to decide whether to continue with a smaller 400 megawatt plant, he said.

Shares in Italian-Thai, Thailand’s biggest building contractor, initially slipped about 1 percent on Tuesday but were flat at 0400 GMT. The main index was up 0.5 percent. .

Thailand’s Ratchaburi Electricity Generating Holding Pcl had signed an agreement with Italian-Thai in November to build coal-fired power plants with a combined capacity of 4,000 megawatts at Dawei. Its shares were flat.

Under that deal, Ratchaburi would have a 30 percent stake in the project, while Italian-Thai would have the other 70 percent.

International investment in Myanmar has been limited until now because of sanctions imposed by Western countries for human rights abuses under the former military regime.

But a new civilian government has embarked on political and economic reform since last year and, if further steps such as the release of political prisoners are taken, sanctions could be loosened.

Asian countries such as Thailand, China and India are already big investors in the country, especially in its resources sector.

The Dawei port project is scheduled to be implemented in three phases from 2010 to 2019.

Last September Myanmar’s government gave in to public anger and shelved a $3.6 billion Chinese-led dam project, a concession that would have been unthinkable under the previous military government.

The 250 sq km (97 sq mile) Dawei Special Economic Zone, which will include an oil refinery and a petrochemical factory as well as the port, is located in the Tanintharyi region of southern Myanmar on the Indian Ocean, 350 km (217 miles) west of the Thai capital, Bangkok. (Reporting by Aung Hla Tun in Yangon and Khettiya Jittapong in Bangkok; Editing by Alan Raybould)

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