Cronies & Coal

YANGON- Cronies have been granted hydropower projects on Ayeyawady and Thanlwin Rivers including the Myitsone dam without public notice.

Moreover, 23 firms including cronies’ companies were granted hydropower projects and they were also allowed to generate and distribute power in 84 townships across the nation.

The tycoons also received the green light to build natural gas power stations.

Some cronies are eyeing coal power plant projects that may be harmful to local people and environment.

The projects caused worries among the locals who might face consequences of the projects and land confiscation.

Cronies & hydropower project

Among cronies’ companies, Asia World, Shwe Taung and IGE groups are the top in receiving hydropower projects from the government without having rivals.

Asia World company was granted eight hydropower projects to be implemented in collaboration with the China Power Investment (CPI) Company. One of them is Myitsone dam project in the confluence of Ayeyawady River, a life-blood for Myanmar people.

Moreover, Gold Energy Co Ltd, a subsidiary of Asia World, was allowed to build Thaukyaykat (2) hydropower project independently, from which the Ministry of Electrical Power has been buying electricity at Ks 70 per unit now.

While implementing the No.2 Thaukyaykat hydropower project, they got a chance to spend more than US$ 70 million out of Chinese loans.

Now, Asia World is taking interest in doing such projects on Thanlwin River. They had been granted the first hydropower project on Upper Thanlwin (Kunlon) River.

The joint venture agreement will allow the companies to build and operate the 1400 megawatt power plant for up to 40 years under a build-operate-transfer scheme.

Shwe Taung , key rival of Asia World, was also granted as many as 10 hydropower projects including Ywathit hydropower project, which will have a capacity of 4000 megawatts and will be implemented together with China-based CDOI Company.

In collaboration with the CPI, Shwe Taung was allowed to implement the projects such as Ayeyawady Myitsone, Chee Phwe, Laiza, Woo Zou, Khaung Lanphyu, Yenan and Pheezaw which may generate up to 6000 megawatts in total.

Moreover, Shwe Taung got the green light to do Belu Creek (3) hydropower project without Chinese assistance. They also got the opportunities to use about US$ 50 million from Chinese loans to construct the hydropower plant.

IGE company, a rival of Asia World and Shwe Taung, was also allowed four projects to be carried out in cooperation with China-based YPIC International Company. They also got approval to work with China-based companies on four other projects.

Among the eight projects granted to the IGE and Chinese companies are the Upper Thanlwin (Mangton) project which would become the largest in the country with a capacity of 7110 megawatts, Hatgyi project with a capacity of 1360 megawatts and Naungpha project with a capacity 1200 megawatts.

However, the government gave the contracts of those hydropower projects to cronies’ companies without public notice.

Almost all hydropower projects will provide 10 or 15 percent free electricity to the country. Asia World, Shwe Taung, IGE companies and their related Chinese firms will take 85 percent to 90 percent of the electricity output from the projects. Myanmar will have a 15 percent stake and the three companies will have up to 90 percent stake in the project.

In conclusion, above three cronies’ companies and their related Chinese firms had gained contracts of almost all hydropower projects in Myanmar.

Cronies & power distribution or Cronies & natural gas

The government had allowed 23 companies to do power distribution in 84 townships including downtown Yangon.

Among authorized companies, Gold Energy, Capital Development and Ruby Dragon got approval to do business in all sectors related to power distribution.

One of the subsidiaries of Asia World got the permit for power distribution in 37 townships in eastern Bago Region.

When their interest in hydropower projects fades, Asia World, Shwe Taung, IGE and the CPI targeted to invest in natural gas power plant projects.

Plans are underway to construct at least eight-natural gas power plant in Yangon Region and some companies which had been granted to supply the power involved in constructions of above natural gas power plant projects.

They obtained the permit for gas power plant project, using dishonest ways. They secretly signed the contracts that set the electricity price including the cost of gas at Ks 300 per unit.

That is why it may be regarded that it was a concern for the public in the future because no details about environmental or social impacts of these projects have been released although the government requires assessments as part of its investment laws.

For natural gas power plant projects, the contracts were signed secretly.

Cronies & Coal

By the time there was no room for hydropower projects, Chinese companies are eyeing natural gas power plant projects.

After the gas power plant projects, they took interest in building coal-fired power plants.

Despite several protests by the people against construction of those power plants, the government agreed to sign the Memorandum of Understanding (MoU) for implementation of nine coal-fired power plants without letting the public know the details.

The government signed agreements with Virtue Land Co Ltd for a project in Kungyankone on August 28, 2014; with Htoo Group and Chinese Huaneng Lancang Co Ltd for a project in Htantapin on January 11, 2010; and with Diamond Palace and other foreign companies for a project in Kyauktan on October 8, 2013; with Toyo Thai Co Ltd for Thilawa project on March 21, 2013.

Moreover, the government entered agreements with Ta Ta Power for Ngayotekaung project in Ayeyawaddy Region; with Lumpoondum for Kengtung project in eastern Shan State; with ISDN and Tun Thwin for Kalewa project; with 24 Hour Co Ltd for Bokepyin project; and with Thanphyothu Co Ltd for Myeik project.

Looking at those companies awarded the projects, the companies like Virtue Land receive many such projects from the government. Virtue Land is a subsidiary of Asia World and Htoo Group is a conglomerate.

Local people and coal related issues

Whichever advanced technologies do the companies promise to employ, local people protest coal power plant projects.

Tigit coal power plant stood as an example. Its impacts on the local people were significant. The plant was built by China National Heavy Machinery Corporation at the cost of total US$70 million.

The plant was shut down because of low technologies and its impacts, said Maw Thar Htwe, deputy minister for electric power on August 23. The plant will be upgraded and installed new technology, he added.

It was the project that cost US$70 million to the nation but it yielded no benefit.

Therefore, local people protest against projects on the mouth of Taninthari River, in Kungyankone and in Myeik.

In fact, the people protest not only for environmental impacts but also for their troubles in being relocated due to the project and other problems they face.

For example, a coal power plant project in Kengtung, eastern Shan State, required a total of 1200 acres of land and it affected 3 villages. Villagers in the project area were relocated and their farmland was confiscated.

If villagers are relocated to a place far from the town, their children will find difficult to go to schools. Those land given to them in return for their grabbed land was not much fertile.

Taking Tigit plant as an example for low-technology one, the local people protest against those projects.

International standards

Among cheap power sources, coal power comes next to nuclear power and hydropower. The government grants coal power plant projects, saying clean coal technology is of international standards.

However, Tigit coal power plant was built by the Chinese and it produced several negative impacts. The plant was finally shut down. Lessons should be taken from it.

Why coal power?

Looking at the government’s secretive behavior in giving away these projects, it seems the cronies are giving instructions to the government officials.

The government once granted hydropower projects to companies secretly. Then, the government arranged to enter contracts with those companies for a unit of power at Ks 70, and this could make large profits for the companies.

For example, Asia World’s Thaukyaykat (2) Hydropower Project proposed to sell a unit of electricity at Ks 75. The government arranged to buy at Ks 70.

After hydropower projects came gas projects. Without the public consent, the government arranged to buy a unit at about Ks 300 from gas projects.

Excluding the cost of gas, companies will make profit at Ks 34 per unit and they are the ones benefited.

Due to insufficient gas for local consumption, there are still difficulties to build and run gas-fired power plants. However, if a company receives such projects, they make a lot of benefits out of them as they get the prices they want.

To produce electricity from coal is the cheapest next to nuclear and hydropower. So, if a coal power plant sells a unit at Ks 70, it will make larger profits than a hydropower company would.

Because of such profits, the cronies seem pushing to coal power plant projects— which can inflict a lot of damage to the environment if a flaw occurs— even in the face of strong opposition from the people.


NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, "Dagon City", “MOGE”, “yangon stock exchange”,"MECTEL", "hydropower", etc.

To learn about the business opportunities in Myanmar click here

To evaluate the various segments of the market that you could possibly enter base on your competencies you can do a Custom Market Entry Strategy Research. You can see a sample report at page "Actual Sample of Client Report”. Click here to go to page.

Do you know that IE Singapore is giving up to SGD 20,000 support for Singapore company to venture into Myanmar? To learn more click here