Deal set for Rakhine’s Kyauk­phyu Port project

The Myanmar Times - - Front Page - HTOO THANT thanhtoo@mm­times.com

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.

Photo: EPA

A child plays foot­ball on the shore­line of Kyauk­phyu, Rakhine state.

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