China Eximbank provides loan for Meiktila-Taungoo 500 kV Transmission Line Construction Project (Linked to Record ID#98029, 96221)

Project narrative

In the Government of Myanmar’s Fiscal Year 2012/2013, China Eximbank reportedly issued a loan for the Meiktila-Taungoo 500 kV Transmission Line Construction Project. The face value and borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds from the loan to finance an EPC contract with China Energy Engineering Group Hunan Electric Power Design Institute Co., Ltd. (for Lot-1) and SEPCO Electric Power Construction Corporation (for Lot-2). The total cost of the project was $160.37 million and it was reportedly financed by China Eximbank. The purpose of the project is to construct a 500 kV double-circuit transmission line — that measures 234 km in length — from Meikhtila (Kankaung) to Taungoo (Sapakywe). The transmission line was designed to start at Meiktila (Kan Kaung) in Mandalay Region, and run south to Taungoo in Bago Region. From there the line is to continue south to Hpa Yar Gyi, just north of Bago City. From the Hpa Yar Gyi, the line was designed to connect to Hlaing Thar Yar in Yangon, and onward to the Ayeyarwady Region, Mawlamyine in Mon State, and Dawei in Tanintharyi Region. Ultimately, the project was expected to provide reliable power supply nationwide, especially to those living in remote areas that are currently without electricity. It was also envisioned that the project will increase employment opportunities, boost productivity and facilitate the emergence of new small and medium enterprises. China Energy Engineering Group Hunan Electric Power Design Institute Co., Ltd., SEPCO Electric Power Construction Corporation and Anhui Electric Power Construction No.2 Engineering Company (AEPC2) are the contractors responsible for implementation of the project. The project officially commenced on March 17, 2019 when the opening ceremony of the project was held in Meiktila. However, work for the project including feasibility studies and finding the route for the transmission lines had been in progress since 2014: Myanmar's MOEE reports that the first phase of the 500kV Kankaung (Meiktila) – Saparkyawe (Taungoo) Transmission Line had been implemented in 2014. Myanmar's MOEE reported that the line was completed in October 2023. There are some indications that the China Eximbank loan for the Meiktila-Taungoo 500 kV Transmission Line 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).