3 Japanese trading houses get approval for natural gas-fired mega power plant in Myanmar

27, Jul. 2020

The Thilawa Special Economic Zone, adjacent to the site for the LNG-fired mega power plant, in the outskirts of Yangon on July 15, 2020. (Kyodo)
The Thilawa Special Economic Zone, adjacent to the site for the LNG-fired mega power plant, in the outskirts of Yangon on July 15, 2020. (Kyodo)

YANGON, NNA – Three Japanese trading giants will join hands with a Myanmar conglomerate in building a gas-fired mega power plant in the outskirts of Yangon to help make up for a power shortage, officials of the three firms said.

The Myanmar government granted the exclusive development rights for the project to the three companies -- Marubeni Corp., Sumitomo Corp. and Mitsui & Co. -- at a signing ceremony held in Naypyidaw, the country’s capital, last Friday.

The three companies are set to form a joint venture with local conglomerate Eden Group Co. to take on the project.

The new power station, which will be built in a harbor district adjacent to the Thilawa Special Economic Zone, will have an output capacity of 1.25 million kilowatts, equivalent to approximately 20 percent of the country’s total power generation capacity at 6.034 million kw in fiscal 2019, according to the Global New Light of Myanmar, a state-backed news agency.

Marubeni and its partners will launch a detailed feasibility study before designing the plant and entering negotiations with the Myanmar government over the details of the project, including the electricity prices.

The joint venture will also build facilities such as terminal and storage for imported liquefied natural gas (LNG). The total construction cost is estimated to be 150 to 200 billion yen ($1.42 to 1.89 billion), a source familiar with the project said.

The three partners have yet to disclose the timing of the plant operation. The Myanmar government has set a goal of starting commercial power generation at the plant within six years.

The electrification rate in the Southeast Asian country surpassed 50 percent in 2019. However, power blackouts frequently hit Yangon, where the population is rapidly growing. This forces many factories, shopping malls and households to introduce private power generators, forcing significant investment.

Hydro and thermal power plants fired by domestically produced natural gas are critical power sources in Myanmar, but the emerging economy in Southeast Asia cannot secure sufficient natural gas for domestic consumption as most of the locally produced natural gas is exported to China and Thailand.

Stiff public opposition persists to the construction of new hydro and coal-fired power plants out of fears that such power generation would destroy the environment. The Myanmar government is inviting foreign businesses to build power stations fired by imported LNG as part of its review of the ratio of power sources in the country.

The three trading giants have been building natural gas-fired power plants in various parts of the world, including the Middle East and Asia.

The Japanese government declared at the July 24 signing ceremony that it would take action to support the project.

Japanese and Myanmar officials involved in the LNG-fired mega power plant project in the outskirts of Yangon at a signing ceremony in Naypyidaw on July 24, 2020. (Photo courtesy of the Myanmar Ministry of Information)
Japanese and Myanmar officials involved in the LNG-fired mega power plant project in the outskirts of Yangon at a signing ceremony in Naypyidaw on July 24, 2020. (Photo courtesy of the Myanmar Ministry of Information)