China Eximbank provides $69.3 million preferential buyer’s credit for 120MW Thaukyegat II Hydroelectric Power Plant Construction Project (Linked to Record ID#98029, 96221)

Project narrative

On January 20, 2010, the Government of Myanmar's Ministry of Electric Power No. 1 and China Machinery Engineering Corporation (CMEC) signed a $77 million commercial (EPC) contract for the 120MW Thaukyegat II Hydroelectric Power Plant Construction Project. China Eximbank and the Government of Myanmar subsequently signed a $69.3 million preferential buyer’s credit (PBC) agreement for the 120MW Thaukyegat II Hydroelectric Power Plant Construction Project. The borrowing terms of the PBC are unknown. However, it is known that the borrower was to use the proceeds from the PBC to partially finance the EPC contract that was signed on January 20, 2010. The purpose of the project was to construct a 120MW hydroelectric power plant — with three, 40MW power generation units (Unit 1, Unit 2, and Unit 3) — on Thaukyegyat creek in Taungoo Township and Kayin State. It involved the construction of a 94 meter high earth dam has created a reservoir that inundates 60 km2 and stores 444 hm3. The power plant is connected to Taungoo substation by a 230 kV transmission line. CMEC was the EPC contractor responsible for implementation. However, the project was implemented on a BOT basis and a private firm called Gold Energy Company Limited is the project owner. The EPC contract went into effect and the project commenced in November 2010. Unit 1, Unit 2, and Unit 2 passed a 72-hour trial run assessment on January 25, 2013, January 29, 2013, and March 21, 2013, respectively. The project owner issued a Final Acceptance Certificate (FAC) on April 10, 2014. A formal project completion ceremony took place on December 31, 2014. There are some indications that the China Eximbank loan for the 120MW Thaukyegat II Hydroelectric Power 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).