By Shibani Mahtani
APR Energy PLC has won a contract to build a 100-megawatt power
plant in Myanmar, becoming the latest American company to join a
small contingent that is plugging into Myanmar's potentially
lucrative energy sector.
"This is a substantial investment," said Clive Turton, APR
Energy's head of business development across Asia Pacific,
declining to specify how much it will invest to develop the
gas-fired project.
The company said in a news release that the deal is likely one
of the largest investments in Myanmar by a U.S. company since
sanctions against the country were lifted. A coal-fired plant with
the same generation capacity in Pakistan would cost an estimated
$160 million, according to Kandra Power Co.
Until mid-2012 the U.S. had maintained strict sanctions against
U.S. companies doing business in or with Myanmar. APR Energy's
investment in the country highlights the declining risk of doing
business there.
Mr. Turton said his firm, which established its presence in Asia
in March 2013, is looking at other similar opportunities across the
country.
APR Energy "was focused on Myanmar from the beginning," he said,
noting that electrification rates, around 29%, are among the lowest
in the region. Around 45 million people in the country live without
power.
The plant, in the central Mandalay region, will supply power to
more than six million people, tapping Myanmar's large reserves of
national gas via the Shwe gas pipeline, facilitated by the
government. The 1,200-kilometer overland pipeline is a key Chinese
undertaking in the country, seen as a strategically important
source of energy that will allow China to reduce its reliance on
the Strait of Malacca--one of the world's busiest oil-transit
routes, separating oil producers in the Middle East from oil
consumers in North Asia--for its energy needs.
The pipeline has been met with pockets of opposition within
Myanmar. It is seen as a project led by the military government
that preceded the current nominally democratic government. Although
the U.S. has lifted most sanctions against companies doing business
in Myanmar, they are still prevented from working with Myanmar's
military, which has extensive commercial interests. They are also
constrained by stringent reporting requirements that necessitate
full reporting of any impact of investment will have on the
Southeast Asian country.
Nevertheless, Mr. Turton said he was "pleasantly surprised" at
the ease of doing business in Myanmar. APR Energy's contract was
won through an open tender conducted by Myanmar's Ministry of
Electric Power, considered by the company to be an
"international-standard process".
APR Energy isn't the first U.S. company to help develop Myanmar
power-generation infrastructure. In December 2012, General Electric
Co. said its gas turbines were being used in a 100-MW power plant
that it projected at the time would go into operation by middle of
2013.
In the APR Energy news release, the U.S. ambassador to Myanmar,
Derek Mitchell, said doing business in an emerging market "does not
come without its challenges, including the need to implement
economic reform policies, address infrastructure challenges and
benefit from the country's economic potential."
He added, "American businesses, with their experience and
commitment to principled and transparent approaches, will make a
tangible contribution to these efforts."
Write to Shibani Mahtani at shibani.mahtani@wsj.com
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