Two gas power plants halt ops in Myanmar due to financial crunch
Two gas-based power plants in Yangon have halted operations since July as they have become financially unsustainable, according to a report published in local media on October 13.
The operations have been suspended owing to an increase in LNG prices in the international market, the depreciation of the kyat against the US dollar, a decline in electricity demand, and the military junta’s inability to pay electricity suppliers, The Irrawaddy reported citing a source.
The 400-MW power plant in Yangon’s Thaketa Township has halted operations and the 350-MW plant in the Thilawa Special Economic Zone in Thanlyin on the outskirts of Yangon is only producing the 50-MW needed to keep its existing LNG stocks cool.
The Thilawa plant, which got commissioned in June last year, is operated by CNTIC VPower – an equal joint venture between China National Technical Import Export Corp. (CNTIC) and VPower Group. The project was awarded to the joint venture in late 2019 through a public tender. The Thaketa plant is also operated by the same joint venture.
Malaysian state-run Petronas started deliveries of LNG to Myanmar, with two cargoes delivered in May and June 2020. The deliveries are part of a deal signed with CNTIC VPower.
According to the electricity purchase agreement it signed with the suppliers, the power ministry agreed to pay for a certain percentage of purchased units in US dollars, but it can now only pay in the Myanmar currency, the source said.
“It is mainly a financial problem. The companies have to buy LNG with US dollars. But they only get Myanmar kyats for the electricity they sell here. So, it is no longer feasible. So, they and the ministry have agreed to halt production,” the source said. The suspension of the two power plants in Yangon is expected to cause blackouts in the coming hot season.
Earlier this year, Myanmar's military junta approved a gas-fired power plant project that will cost $2.5bn. Bangkok-listed TTCL Public Co signed a power purchase agreement earlier this year with Myanmar state-run Electric Power Generation Enterprise for the 388-MW gas to power project in the Yangon region. TTCL is developing the project along with Japan’s Sojitz Corp, Shikoku Electric Power Co, and Inpex Corp. It is due online in 2024.
Another Thai firm, PTTEP, in December 2020 secured the right from the government to develop a $2bn gas-to-power project in the country.