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

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 Project ID#98029). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Project ID#96221).

Additional details

1. This project is also known as the 3x40MW Thaukyegat II Hydroelectric Power Plant Construction Project, the 120MW Thaukyegat (2) Hydropower Project, the Thauk Ye Khat 2 Hydroelectric Power Plant Project, and the Thout Yay Khat 2 Project. The Chinese project title is 道耶卡水电站项目. The Burmese project title is သောက်ရေခပ်(၂) ရေအားလျှပ်စစ် စီမံကိန်း. 2. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 19.3343 years in 2010. AidData estimates the maturity of the China Eximbank loan that supported the 120MW Thaukyegat II Hydroelectric Power Plant Construction Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 5.0126 years in 2010. AidData estimates the grace period of the China Eximbank loan that supported the 120MW Thaukyegat II Hydroelectric Power Plant Construction Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 3.7267% in 2010. AidData estimates the interest rate of the China Eximbank loan that supported the 120MW Thaukyegat II Hydroelectric Power Plant Construction Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0

Number of official sources

22

Number of total sources

26