APR Energy PLC has won a contract to build a 100-megawatt power plant in Myanmar, becoming the latest American company to join a small contingent that is plugging into Myanmar’s potentially lucrative energy sector.
“This is a substantial investment,” said Clive Turton, APR Energy’s head of business development across Asia Pacific, declining to specify how much it will invest to develop the gas-fired project.
The company said in a news release that the deal is likely one of the largest investments in Myanmar by a U.S. company since sanctions against the country were lifted. A coal-fired plant with the same generation capacity in Pakistan would cost an estimated $160 million, according to Kandra Power Co.
Until mid-2012 the U.S. had maintained strict sanctions against U.S. companies doing business in or with Myanmar. APR Energy’s investment in the country highlights the declining risk of doing business there.
Mr. Turton said his firm, which established its presence in Asia in March 2013, is looking at other similar opportunities across the country.
APR Energy “was focused on Myanmar from the beginning,” he said, noting that electrification rates, around 29%, are among the lowest in the region. Around 45 million people in the country live without power.
The plant, in the central Mandalay region, will supply power to more than six million people, tapping Myanmar’s large reserves of national gas via the Shwe gas pipeline, facilitated by the government. The 1,200-kilometer overland pipeline is a key Chinese undertaking in the country, seen as a strategically important source of energy that will allow China to reduce its reliance on the Strait of Malacca–one of the world’s busiest oil-transit routes, separating oil producers in the Middle East from oil consumers in North Asia–for its energy needs.
The pipeline has been met with pockets of opposition within Myanmar. It is seen as a project led by the military government that preceded the current nominally democratic government. Although the U.S. has lifted most sanctions against companies doing business in Myanmar, they are still prevented from working with Myanmar’s military, which has extensive commercial interests. They are also constrained by stringent reporting requirements that necessitate full reporting of any impact of investment will have on the Southeast Asian country.
Nevertheless, Mr. Turton said he was “pleasantly surprised” at the ease of doing business in Myanmar. APR Energy’s contract was won through an open tender conducted by Myanmar’s Ministry of Electric Power, considered by the company to be an “international-standard process”.
APR Energy isn’t the first U.S. company to help develop Myanmar power-generation infrastructure. In December 2012, General Electric Co. said its gas turbines were being used in a 100-MW power plant that it projected at the time would go into operation by middle of 2013.
In the APR Energy news release, the U.S. ambassador to Myanmar, Derek Mitchell, said doing business in an emerging market “does not come without its challenges, including the need to implement economic reform policies, address infrastructure challenges and benefit from the country’s economic potential.”
He added, “American businesses, with their experience and commitment to principled and transparent approaches, will make a tangible contribution to these efforts.”
Source: The Wall Street Journal