Talk of the Town
On May 5, Myanmar newspaper The Irrawaddy reported that, in the wake of personnel change at the Ministry of Electricity and Energy, the Myanmar government has canceled 26 tenders for solar PV projects issued in Sept 2020, under the previous National League for Democracy (NLD) government. Chinese companies have dominated tenders for solar projects in Myanmar for a number of years, winning 28 of the 29 tenders up for grabs from May to Sept 2020. Many of those companies have now been blacklisted by the Myanmar government for “breaching tender regulations”, write The Irrawaddy.
The companies include three major private companies, Sungrow Power, Xi’an LONGi Solar and GCL System Integration, as well as three state owned power sector investors, Yunnan International Power Investment (a subsidiary of the State Power Investment Corporation(SPIC)), China Machinery Engineering Corporation (CMEC), and the Gezhouba Group Overseas Investment Company.
According to the Myanmar Ministry of Electricity and Energy, the apparent breach of tender regulations is the companies’ failure to sign Power Purchasing Agreements with authorities since the coup in Feb 2021. The Chinese companies had promised to sell electricity from the 26 solar projects at a far lower rate than their competitor bidders – between 3.5 and 5.1 US cents per kilowatt, while the average cost for power supply in the country by 2018 was 8.1 cents/Kw.
Interestingly, the last few weeks has seen a flurry of reports on Chinese solar projects in Myanmar holding ceremonies for the “official commencement of construction”. As we discussed a few weeks ago, among them were two SPIC invested projects, tenders for which were won in the 2020 round of bidding. Local government officials from Mandalay and Bago regions were in attendance at the ceremonies. But according to Myanmar’s Ministry of Electricity and Energy, those tenders are now invalid and the company blacklisted.
Of the Chinese companies, Sungrow will be particularly affected. In the 2020 bidding round they won a total of 9 out of the 29 tenders. CMEC won 8.
The dramatic move by Myanmar’s government may have come as a surprise to many Chinese Myanmar watchers. While many questions were raised about the future of Chinese investments in the country in the wake of the coup in Feb 2021, business appeared to continue largely unaffected. As we covered at the time, Chinese analysts were in fact largely calm about the coup. On the day of the coup on 1 Feb, associate researcher at the Chinese Academy of Social Sciences, Tian Guangqiang, offered his opinion that a new military government would likely “actively protect and advance Chinese investments” in the country due to its urgent need for economic development. Developments since then have perhaps shown the limitations of one dimensional economic assessments of complex political realities.
Of course, many more Chinese companies are involved in projects in Myanmar – including the proposed Kyaukpyu Port, the Kyaukpyu gas power plant being constructed by Power China, and a number of new solar project tenders won in 2021. The cancellation of tenders and blacklisting of Chinese solar companies last week should be setting off warning signals for all of them.