Bank of China (Hong Kong) provides $100 million loan for Phase III (Part 1) of Myanmar Communication Infrastructure Construction Project (Linked to Record ID#63327, #63665, #64443)

Project narrative

In 2019, Bank of China (Hong Kong) Ltd. (BOC (HK)) and Myanmar Fiber Optic Communication Network Co., Ltd. (MFOCN or 缅甸光纤通信网络有限公司) — a project company and subsidiary of HyalRoute Communication Group Ltd. (HyalRoute) — signed a $100 million buyer’s credit loan agreement for Phase III (Part 1) of Myanmar Communication Infrastructure Construction Project. The borrowing terms of the loan are unknown. However, it is known that the loan was secured by (i.e. collateralized against) fiber optic network assets and an account pledge. It is also known that the loan is backed by a 15-year, $115,370,375 guarantee (covering the loan’s principal and interest) from the Multilateral Investment Guarantee Agency (MIGA). HyalRoute also made a $12.4 million equity contribution to MFOCN for Phase III (Part 1). The project constitutes Phase III-1 of a national program involving the installation of 62,000km of national fiber optic cable network and 1,000 telecom towers between 2012-2023 (the Program). Phase I of the program (2012-2016) entailed the construction of 17,401 km of the fiber optic cable (FOC) backbone. Phase II of the program (2017-2018) included the construction of 14,599km of fiber optic network. MIGA provided two guarantees for Phase II covering the installation of a total of 8,500km of FOC backbone. The remaining 30,493km of FOC are to be built in three phases (III, IV, and V) between 2019 and 2023. An Environmental and Social Action Plan dated April 16, 2019 was made to be implemented for the project. This included rolling out terms and conditions for contractor agreements and rolling out appropriate worker documentation. While an IEE was prepared for Phase I and II, there is no evidence that one was prepared for Phase III. In the first part of phase III of the program, MFOCN will aim to lay down 4,300 km direct-buried backbone FOC in 7 states and 200 km of duct-buried routes in urban areas in Myanmar. Construction of FOC involves digging a trench approximately 30-50 cm wide and 1.2 – 1.5 m deep, laying the FOC and then back filling the trench. In urban areas FOC is duct buried, and in peri-urban and rural areas the FOC is directly buried. The FOC network includes the construction of two types of ‘core facilities’, where FOC connects to communications equipment: type A (200 m2) and type B (60 m2). Both facilities include a base transceiver station (BTS), electricity transformer, backup generator and an area reserved for telecommunication towers (if required). Type A core facilities will also have an equipment laydown area and accommodation for the maintenance teams. Core facilities have a dual purpose: i) to provide greater capacity for the operators in the telecommunication sector and ii) to improve both outdoor and indoor coverage for service providers. FOC route is designed by the MFOCN’s construction planning department. Designs are completed section by section, and submitted to Myanmar’s National telecommunications authority - Post and Telecommunication Department (PTD) and Local Development Committee (and in some places, the municipal construction management department) for approval. Construction is carried out section by section and each section is typically between 1-3 km long. Construction of a section can take up to 3 months from early engagement of local communities to completion, involving around 250 workers over the period. Construction activities are carried out during September-May period to avoid rainy seasons whereby flooding and rains render construction difficult. Where an area may pose problems (e.g. community reluctance), MFOCN has considerable technical flexibility in planning an alternative route to avoid a potential problem area.