Burma Business Roundup (Saturday, March 3)

Tavoy Coal Plant Green Light if Electricity not Exported

One of the potential Thai partners in developing the planned special economic zone (SEZ) on Burma’s southeast coast says the Naypyidaw government has revised its ban on building a giant coal-fueled power station.

Bangkok’s state energy conglomerate PTT said the Burmese government is now prepared to permit a 4,000 megawatt capacity plant as long as none of the electricity is exported to Thailand.

In late January, the Burmese Energy Ministry shocked the chief concessionaire for the Tavoy SEZ construction giant Italian-Thai Development by blocking plans for the coal power plant on the grounds that it was an environmental hazard.

Burmese environmentalists petitioned the government to stop the plant. The decision has threatened to undermine the SEZ plans, which include a deep-see port, oil transhipment facilities and a petrochemical complex.

Italian-Thai had said it would consult potential development partners, which include PTT, to consider alternative energy sources to fuel the construction and operation and Tavoy, also known as Dawei.

PTT Chief Executive Pailin Chuchottaworn told Bloomberg financial news agency on Wednesday that the Burmese government is only “against the idea of exporting coal-based power to Thailand, but they will allow coal-based power for internal use.”

The Burmese government has not commented on PTT’s statement.

PTT’s subsidiary PTTEP, an exploration and production company, is developing several new gas fields in Burma’s offshore waters, notably the Zawtika block in the Gulf of Martaban.

Development Donors Queue to Offer Assistance

Two major potential economic reconstruction donors have made positive announcements this week about re-engaging with the Burma authorities.

The Asian Development Bank (ADB) said it is preparing to fund projects in the country after an absence of 25 years in the wake of recent political reforms.

“We have started exploratory work,” said ADB Managing Director General Rajat Nag.

“The development challenges of the country are huge [including] infrastructure and the social sector. They need a lot of support and capacity building,” Nag told Bloomberg financial news agency this week.

Separately, a delegation from the European Union Parliament has been visiting Burma to make assessments regarding the possible lifting of economic sanctions.

The visit, by 11 EU legislators, comes ahead of Brussels’s annual review of its sanctions imposed on Burma and its former military leaders.

The [EU] ministers of foreign affairs are scheduled to meet in April and I would bet that they would lift [the sanctions] gradually, especially if Aung San Suu Kyi will be elected,” legislator Robert Goebbels from Luxembourg told New York-based NTD Television on Wednesday.

“That would be a boost to relations between the European Union and Myanmar,” he said, adding that he believed there are no other hurdles.

The EU has already announced a two-year US $200 million aid package, but is expected to greatly bolster this with economic development help.

Nag said he was now seeking approval from the bank’s shareholders to provide assistance for infrastructure and development projects in Burma.

‘Formidable’ Infrastructure Problems Hamper Burma Revival

Despite having an economy in tatters, an incoherent exchange rate regime, weak investment laws and a crippled banking system, “there are no doubts about [Burma’s] potential,” says a report by a European think tank.

As governments and international donor organizations beat a path to Burma’s door, the European Union is especially well placed to help, the Brussels-based Friends of Europe study said.