MPPE announces JV tender for petroleum business

Myanma Petroleum Products Enterprise (MPPE) has invited private companies to form a joint venture for a project in the petroleum industry, through a tender published in a state-run newspaper.

The state-owned enterprise has been preparing the tender documents for the past few months, with a view to re-entering the petroleum distribution market in partnership with a foreign firm. MPPE announced last year that it would issue a tender, and has already allowed foreign companies to study state-owned petroleum storage facilities.

The joint venture project will include the importation, storage, distribution and sale of all petroleum products except liquefied petroleum gas (LPG) and liquefied natural gas (LNG). Additionally, the tender states that the joint venture company under MPPE will rehabilitate existing facilities and expand the business.

The joint venture company will be formed according to the Foreign Investment Law and Special Companies Act of 1950. The contract will be valid for 30 years, with the option to extend the agreement twice, by 20 years each time.

“This invitation to tender has been issued directly to private companies. There was no invitation for expressions of interest because we have already allowed interested companies to see our facilities,” said an MPPE official. These companies include JX Nippon and Sumitomo from Japan, Singapore’s Puma Energy, and PTT from Thailand.

Interested parties should buy the tender documentation, which costs US$10,000 and is non-refundable. In addition, companies should pay a bid bond of $4 million to MPPE.

Eligible companies must have at least 10 consecutive years of experience in petroleum trading, storage and distribution and at least three years’ trade volume of 2.7 million cubic metres of petroleum products per year or more, said yesterday’s announcement.

MPPE is one of the largest downstream players in the country. Parts of it have been privatised and in 2010 all but 12 of its 260 petrol stations were sold. Since then, its monopoly on fuel imports has also been broken – around 70 private companies have now been licenced to import and distribute petroleum products.

Currently, MPPE handles the government’s supply of petroleum products and sells the surplus products to private companies.

“We want to extend our facilities and capabilities to an international standard, and exercise quality control over the domestic market in a competitive market through this joint venture project,” said the MPPE official.

The private petroleum distribution market is overseen by the Myanmar Petroleum Trade Association (MPTA) which is chaired by prominent businessperson U Tay Za.

Following a separate invitation from MPPE for foreign involvement in a joint venture jet fuel business at Yangon International Airport, Singapore-based Puma Energy has been selected to become the first overseas company to run a private jet-fuelling business in Myanmar.

MPPE owns four main fuel terminals, 24 sub-fuel terminals and 12 petrol stations. Around 70 private companies run the country’s 1163 petrol stations, but few have storage facilities or an import licence.

Source: Myanmar Times

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