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Economy

Myanmar to double electricity capacity with LNG-fueled plants

Three facilities, expected to cost $5bn, will be first to use imported gas

YANGON -- Myanmar's government has lined up three thermal power plant projects, aiming to meet electricity demand that is increasing at a pace of 15% a year. The facilities will be the country's first to use imported liquefied natural gas, and each will be equipped with a floating terminal to receive shipments. 

The government has reached a basic agreement with international partners including French energy company Total and Chinese electrical equipment supplier Zhefu Holding Group. The three power stations will add 3,000 megawatts to the country's generation capacity -- nearly equivalent to the current figure. 

The total investment is expected to reach about $5 billion.

Total, along with Germany's Siemens, is to build a 1,230MW plant in the southern region of Tanintharyi. Zhefu, meanwhile, is to establish a joint venture with a local company to build a 1,390MW plant in the Ayeyarwady region.

The cost estimate for each project is in the $2 billion to $2.5 billion range. Both plants are expected to be up and running in three or four years.

Meanwhile, Toyo Thai, in which Japan's Toyo Engineering holds a 10% stake, is to expand an existing thermal plant in Yangon, the country's commercial capital. The project will increase the power station's generation capacity by 360MW by 2020. Toyo Thai estimates the cost at about $350 million.

The government and the contractors still need to work out electricity purchase agreements and discuss ways to finance the projects. Hammering out the purchase agreements could be difficult, given that power subsidies have already drained the state coffers.

About 40% of the country now has access to electricity, and the ratio is rising, sparking concern about worsening power shortages. The government sees LNG imports as the answer. 

Myanmar has four offshore gas fields, but 80% of the extracted gas is sent to Thailand, China and other countries under contracts with the developers. This setup was a vital source of foreign currency for the previous military regime, back when domestic demand for gas was limited. 

Today, Myanmar has the capacity to produce 3,190MW of electricity. Hydropower accounts for about 60%, while thermal stations burning domestic gas make up 30%. 

The government had initially planned to seek bids from foreign companies for the plants and LNG terminals. Instead, it decided to negotiate directly with companies that had expressed interest.

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