Trading houses Marubeni, Sumitomo Corp. and Mitsui & Co. will build a liquefied natural gas-fired power plant in Myanmar, one of the biggest investments by Japanese companies in the Southeast Asian country, people familiar with the matter say.
The three companiesestimate total investment in the project at $1.5 billion to $2 billion.The plant is expected to start operating by 2025 with a capacity equalto about 20% of Myanmar’s existing power plants.
The project marks a win for Japan in a region where China has competed hard for infrastructure deals.
Demand for LNG power is expected to grow in Southeast Asia as a low-emission alternative to cheap coal. Marubeni, Sumitomo and Mitsui expect the project in Myanmar to help them expand their power businesses in the region.
In Myanmar, electricity demand has been growing at a rate of 10% to20% a year with industrialization and the electrification of farmingvillages. Frequent power outages have posed an obstacle to the country’sgoal of attracting foreign investment in manufacturing.
The plantwill be built in a suburb of Yangon, Myanmar’s commercial capital andmost populous city. The three companies will operate it through a jointventure they will establish with Eden Group, a local conglomerate whosebusinesses include real estate and agriculture.
The plant will have a generating capacity of 1,250 megawatts — about as much as one nuclear reactor. Myanmar’s existing power generation capacity is about 6 megawatts, according to the country’s Ministry of Electricity and Energy.
The Myanmar government will soon provide the project partners awritten notification that gives a green light to proceed to the nextstage, which includes a detailed feasibility study, plant design andnegotiations on selling power to the Electric Power GenerationEnterprise, a public utility.
With its access to the Indian Ocean,Myanmar is a key focus of China’s Belt and Road infrastructureinitiative. Chinese President Xi Jinping called on Myanmar’s governmentto smooth the way for infrastructure projects during a visit to thecountry in January. In 2018, Chinese companies secured the rights to anLNG power plant project of a similar scale to that planned by theJapanese trading houses.
The new investment in LNG power comes asSoutheast Asian nations grapple with the environmental costs of coal,which provides about 40% of the region’s electric power. The fuel’s highcarbon dioxide emissions have raised opposition to new coal plantsamong both local residents and the international community.
LNGemits about half as much CO2 as coal when burned. Myanmar recently begancommercial operations at an LNG power plant run by a Hong Kong-ledgroup. In Vietnam, the state-run PetroVietnam group has started buildingthe country’s first LNG terminal, which is expected to becomeoperational in 2022. The Philippines also has plans for an LNG terminal.
Japan has faced criticism for its funding of overseas coal projects, prompting major trading houses to halt participation in new power plant and mine deals.
Source: Asia Nikkei
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