China Eximbank provides $60 million loan for 111MW Tha Htay Hydropower Plant Construction Project (Linked to Record ID#96221, 98029)

Project narrative

In early 2012, China Gezhouba Group Company Limited and Myanmar’s Ministry of Electric Power No (1) signed an equipment installation contract for the 111MW Tha Htay Hydropower Plant Construction Project. China Eximbank issued a loan to the Government of Myanmar for the 111MW Tha Htay Hydropower Plant Construction Project and it was likely used by the borrower to finance this equipment installation contract. One unofficial source puts the face value of the China Eximbank loan at $49.357 million. Another unofficial source puts the face value at $119.17 million. However, AidData relies upon the face value ($60 million) reported by the Goverment of Myanmar’s Ministry of National Planning and Economic Development. The borrowing terms of the loan are unknown. The Norwegian Government is also supporting the 111MW Tha Htay Hydropower Plant Construction Project. The purpose of the project is to construct a 111 MW hydroelectric power plant on the Tha Htay River, about 19 kilometers northeast of the town of Thandwe in Rakhine State. It involves the construction of a 91 meter rock fill high dam. The power plant was also expected to be connected to the Oakshitpin-Taun Gup substation by an 8.5 km 230 kV transmission line. China Gezhouba Group Company Limited is the contractor responsible for project implementation. Sources differ on the timing of the commencement of project implementation. A World Bank source claims that construction began in 2008, while a Myanmar Project Bank source reports that construction began during the 2013-2014 fiscal year. As of May 2017, the project had achieved a 50% completion rate. It is scheduled for completion in the 2023-24 fiscal year. As of July 2023 the project is at 77.9% completion and expected to be completed in the 2025/2026 fiscal year. Despite a resettlement plan associated with the project, there has been significant controversy associated with the often involuntary resettlement of locals for the construction. Three villages with 1591 people were relocated for construction. Resettlement locations were often inadequate. In addition, compensation, in particular for loss of agricultural land, were not sufficient for the loss of livelihood associated with loss of fertile agricultural lands. In addition, the government has failed to provide replacement agricultural lands as promised for resettlement. There are some indications that the China Eximbank loan for the 111MW Tha Htay Hydropower Plant Construction Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Government of Myanmar signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Record ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#96221).