Massive loan from China to fund gas investment
December 13 - 19, 2010
AN INVESTMENT deal with China will provide billions that some hope could be used to strengthen Myanmar’s infrastructure.
On November 30, Myanmar signed a US$2.4 billion loan disbursement cooperation with China in Nay Pyi Taw.
The agreement was made between Myanmar Foreign Investment bank and the China Development Bank Corporation (CDBC). The loan is mainly for investment in the China-Myanmar gas pipeline, which runs from Rakhine’s Kyauk Phyu township to China’s Yunnan province, said Mr Jin Honggen, economic and commercial counselor of the Chinese embassy in Yangon.
“The loan will be mainly for the natural gas project in Kyauk Phyu, which involves Myanmar, China, Korea and India, where Myanmar has 7.3 percent of the shares. Part of the loan is provided for Myanmar as an investment in the project,” said Mr Jin.
He did not reveal further details of the loan disbursement, but said the loan would help bring the project to speedy completion, besides providing foreign investment funds for Myanmar and energy for Yunnan province.
“The natural gas from Myanmar will be used for Yunnan province’s industrial requirements and for residential use,” said Mr Jin, adding that the project offered advantages to both countries.
He said the other part of the loan would be used in different projects, where the officials concerned would provide further details.
“Looking back over the past three decades, China’s development has been considerable, and we would like our neighbours, especially Myanmar, to develop more,” he said, adding that a certain amount of development was already apparent in Yangon, Mandalay and Nay Pyi Taw.
“We can see that there are many supermarkets appearing in the cities with lots of customers, which is one sign of development the Chinese embassy is happy to see,” said Mr Jin.
He added that Chinese investment in Myanmar had increased over the past few years, indicating good cooperation between the two countries. The Chinese embassy was urging Chinese investors to come to Myanmar, he said.
Dr Maung Aung, an economist, said the Chinese investment funds should be used to strengthen infrastructure, seeing that Myanmar did not receive much official development aid from foreign countries.
“If the loan is used effectively for the long-term infrastructure development of the country, it would be very effective for Myanmar,” said Dr Maung Aung.
Myanmar at present produces more than 1 billion cubic feet of gas a day (mmcfd) from its two offshore projects in the Gulf of Mottama. According to government figures, Myanmar is one of the leading producers of natural gas via pipeline in the Asia-Pacific region, and the 11th largest exporter worldwide. Of the two offshore fields, Yadana produces 700 mmcfd, while Yetagun produces 400 mmcfd.
PTTEP – a Thai gas company operating in Myanmar since 1998 – buys more than 1 billion cubic feet of gas a day from Yadana and Yetaugun.
The country has earned more than $2 billion from exporting natural gas to Thailand, and earnings from gas sales will increase when new projects start producing over next three years.