Deal set for Rakhine’s Kyaukphyu Port project
The Myanmar government and China’s CITIC Group will sign a framework agreement next week for the construction of the Kyaukphyu port in Rakhine State.
THE Myanmar government and China-based CITIC Group will sign a framework agreement for the construction of the Kyaukphyu Deep Sea Port project in Rakhine State next week, said U Aung Htoo, deputy minister of commerce.
“It was agreed that for the first phase, the deep sea port will be implemented with US$1.3 billion (K2.4 trillion) in funds. The framework agreement will be signed between CITIC and Kyaukphyu Special Economic Zone (SEZ) Management Committee on November 8,” he told journalists in Nay Pyi Taw yesterday.
CITIC Group initially won the tender to construct the Kyaukphyu (SEZ) with an estimate investment of $7 billion in December 2015.
The development comes after months of difficult negotiations between China state investment vehicle CITIC Group and the NLD-government to reduce the Chinese consortium’s stake in the port from 85 percent to 70pc. Under the previous government, CITIC had won the original tender to build the port based on an 85:15 ratio.
The Chinese have since agreed to accept a 70pc stake the deep sea port in Kyaukphyu. The remaining 30pc will be taken up by the Myanmar government and local public firms
Meanwhile, development of the deep sea port will take place in four stages as originally planned, but the first phase has been scaled down and is now expected to cost US$1.3 billion, according to U Khin Maung Cho, Minister of Industry. This will involve construction of a terminal with the capacity for 2-3 vessels.
Under the original agreement, two other terminals were slated to be built in Made Island and Ramree Island. The original estimated cost of development for the entire project had been US$7.2 billion, with the first phase expected to cost US$1.6 billion.
“They are going to sign the framework agreement to implement the first phase of deep sea port starting with an investment of US$1.3billion. Myanmar will also have to invest a certain ratio,” U Aung Htoo said.
As Myanmar has increased its stake in the port to 30pc from 15pc, it will now be required to fork out a certain proportion of the total investment. Under the initial 85:15 agreement, Myanmar was exempted from investing as a means of relief from China,” he told The Myanmar Times.
“As we now need to invest, we have negotiated to implement the project in four phases. If the first phase is successful and there is demand, we will carry on with the following phases,” he added.
A child plays football on the shoreline of Kyaukphyu, Rakhine state.