Narrative
Full Description
Project narrative
On December 15, 2017, China Triumph International Engineering Company Limited (CTIEC) issued a $48 million supplier credit (loan) — as part of a larger Sinosure-backed EPC+F (EPCF) arrangement — to GEP (Myanmar) Co., Ltd. (GEPM) for Phase 1 of the 220 MW Minbu Solar Power Plant Project. GEPM is a special purpose vehicle (SPV) and wholly-owned subsidiary of Green Earth Power (Thailand) Co., Ltd. (GEPT). The loan carried the following borrowing terms: a 2.25-year grace period, and a 13.79-year maturity, and a 6% interest rate. The first repayment date was originally scheduled for February 28, 2020 and the last repayment was originally scheduled for September 27, 2031 (12 years after Phase 1 achieved its Commercial Operations Date). However, the first repayment date was later changed to October 31, 2020. The proceeds of the loan were to be used by the borrower to finance 70% of the cost of a $66.31 million commercial (supply) contract between Vintage EPC Co., Ltd. (VEPC) and CTIEC, which was signed on August 3, 2016 and amended on December 21, 2017. The purpose of Phase 1 of the project was to install 50MW of power generation capacity at the Minbu solar farm in Minbu District (exact locational coordinates: 20.0494, 94.6828). In February 2016, GEPT incorporated GEPM as a project company (SPV) to develop the 220 MW Minbu Solar Power Plant Project. Then, in March 2016, GEPM executed a Power Purchase Agreement (PPA) with Myanmar Electric Power Enterprise — later renamed Electric Power Generation Enterprise (EPGE) — for a BOT (Built-Operate-Transfer) concession with a term of 30 years. On August 4, 2016, one day after the supply contract for the project was signed, VEPC and VTE International Construction Co., Ltd. (VINTER) entered into 4 turnkey EPC subcontracts with CTIEC for the 4 respective phases of the project. Construction started in April 2018 and was originally expected to end within 12 months (April 2019). Construction was ultimately completed in June 2019. Phase 1 included the construction works of all substations for Phases 2, 3, and 4 to connect to the transmission line of EPGE. On April 5, 2019, the Department of Power Transmission and System Control (DPTSC), under the authority of Myanmar’s Ministry of Electricity and Energy (MOEE), conducted the power plant’s cold commissioning. Supply of electricity to Myanmar National Grid started on June 27, 2019. The power plant started to realize revenue and achieved its Phase 1 Commercial Operation Date (COD) on September 27, 2019 under the 30-year PPA at a contractual electricity rate of USD 0.1275 per kWh. On November 15, 2019, EPGE and MOEE issued a letter of confirmation of the COD for Phase 1. The Provisional Acceptance Date for Phase 1 was on February 28, 2020. The Government of Myanmar announced a countrywide, Covid-19 lockdown from March 29, 2020 until August 31, 2020. It then extended the lockdown to October 31, 2020. Under Clause 17.1.2 of the supplier credit agreement, force majeure was invoked. Consequently, the loan’s first repayment date was moved to October 31, 2020.
Staff comments
1. Under most EPC+F contractual arrangements, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. Therefore, AidData assumes that the loan issued to CTIEC is backed by a repayment guarantee from the Government of Myanmar (i.e. a sovereign guarantee). 2. The Chinese project title is 缅甸敏巫220MW地面光伏电站项目 or 建的缅甸敏巫220兆瓦地面光伏电站项目（一期. 3. More research is needed to determine the identity of the lending institution that financed Phases 2, 3, and 4 of the 220 MW Minbu Solar Power Plant Project. 4. As part of the EPC+F arrangement, one source suggsts that CTIEC secured financing from 'a financing company in China' (https://www.irplus.in.th/Listed/META/pdf/MDA_3Q2021N_EN.pdf). This issue warrants further investigation.