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Chinese developers sweep up 1GW solar bids in Myanmar

Exclusive: Firms from China have swept up all but one of the solar projects after a tender which was widely criticised for effectively keeping out local and most international bidders.

Chinese companies and their consortia have won the bid to build 28 out of 29 solar plants tendered by the Ministry of Electricity and Energy, according to the results provided by the ministry to bidders and seen by this newspaper.

Sungrow and China Machinery Engineering Corp won nine and eight bids respectively, while SPIC Yunan International Power bagged four. Cell maker Longi and Myanmar conglomerate Shwe Taung’s Chinese consortium each won three. Shanghai-based renewable energy firm Universal Energy and its local partner locked up one project and the last went to solar plant builder Ib Vogt of Germany.

The ministry launched the bid opening in the morning of Wednesday (September 9) but did not make any public statements. It did not respond to requests for comment by press time. Shwe Taung confirmed they won three tenders.

The Myanmar Times corroborated the list with two other industry sources. The dominance of bidders from Myanmar’s giant neighbour mirrors last year’s emergency energy tender, hurried through within a month and all snapped up by Chinese firms. The results, analysts say, could dampen the ability to attract quality investors as it raises fresh questions over the ministry’s intention to attract nonChinese investments.

Both initiatives came under fire for its hurried process and what many investors and industry experts see as unreasonable conditions. The government acknowledged the concerns raised regarding the solar tender but said they wanted to proceed with it quickly.

This is the last tender rolled out under the National League for Democracy government. Official campaign period started yesterday for the elections set for November.

The bidding price has come far lower than the industry’s expectation with the average winning price at US$0.0422 per unit, as compared to the average bidding price at $0.0508. The bidding price ranged from $0.0366 to $0.1051 cents per unit.

According to the tender process set out, the bid goes to the lowest bid regardless of the technical aspect of the proposals. U Lin Tun, managing director of solar firm Quasar Resources, was surprised by the winning bidding rate.

“The proposed energy prices appear to be far below market expectations,” he said. Quasar Resources took partin the bid. “We believe it is highly questionable if these solar generation projects can be adequately constructed and financed at these low proposed energy rates. Most prices are around 4 cents [$0.04] per kilowatt-hour.”

Referring to the fact that Sungrow and CMEC locked up 17 sites, U Lin Tun warned of the risks of concentrating the bids into the hands of a few developers. “Spreading work among other qualified bidders would be more efficient and provide execution risk diversification to assure urgently needed power availability within Myanmar on schedule.”

Similar tenders in Malaysia, he added, limit bidders to three sites each to minimise the risk.
The winners will now have six months to build the plants. Industry experts are sceptical if the implementation deadline could be met, even for large companies which have significant experience in the area, without renegotiating to get better terms later on.

A list of bidders, leaked last month, revealed that a total of 155 bids were submitted for the 30 sites. More than half, 85, came from Chinese companies. Thai and local firms made 22 and 21 bids respectively, while 10 came from Europe and four from the US and Japan.

The tender became embroiled in controversy as soon as it was announced in May, accompanied by a one-month deadline.

Major business groups wrote to energy minister U Win Khaing to request an extension of the deadline to ensure a level-playing field. On top of travel restrictions and other COVID-19 constraints that barred potential foreign investors from coming in, land acquisition and project financing also required a period much longer than a month.After the backlash, the deadline was extended by just one month.

Industry leaders in Myanmar, including U Kyaw Kyaw Hlaing, chair of Smart Group, U Ken Tun, chair of Parami Energy and Alakesh Chetia, CEO of Yoma Micro Power, have also raised their concerns over the way the tender was carried out.

It is “mind-boggling” how some bidders pulled off 20 bids and bought the land given the constraints, Mr Chetia previously said.

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Source : Myanmar Times

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