Developer
Sembcorp Industries

In October 2018, Sembcorp Industries (Sembcorp)’s Myingyan Independent Power Plant (IPP) successfully commenced full commercial operations, following its first phase of operation in May 2018.

Located in Mandalay, the 225MW combined-cycle, gas-fired power plant is set to be one of the largest in Myanmar. It will generate around 1,500 GW hours of power for supply to Myanmar’s Electric Power Generation Enterprise, providing reliable electricity to around 5.3 million people.

Using efficient technology, the plant will be able to maximize power output while minimizing emissions, which is in line with Sembcorp’s commitment to reduce carbon emission intensity by close to 25% by 2022.

In addition to providing reliable electricity, Sembcorp also aims to be a valued partner to the Myingyan community living in close proximity to the plant, and has been actively engaging residents to understand their concerns and needs. Working closely with those in the community, Sembcorp has helped to improve their living standards and quality of life by assisting in flood relief work, generating training opportunities, refurbishing schools and repairing infrastructure.

The US$300 million project was Myanmar’s first competitively tendered independent power producer (IPP) project. It was awarded to Sembcorp after an international bidding process that was advised by International Finance Corporation (IFC) of the World Bank Group. The project was developed under a Build-Operate-Transfer agreement between Sembcorp and the Ministry of Electricity and Energy (MOEE) signed in January 2017. Under the agreement, Sembcorp will build and operate the power plant for 22 years, after which the facility will be transferred to the Myanmar government.

The Myingyan IPP was also Myanmar’s debut into the international project finance market. The debt fi­nancing comprised a combination of fi­xed and floating rate loans provided by a diverse set of lenders that included multilateral development banks Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB) and International Finance Corporation (IFC) and several commercial lenders including Clifford Capital, DBS, DZ Bank and OCBC. ADB and Multilateral Investment Guarantee Agency (MIGA) have also provided a 4-point political risk guarantee to provide credit support for the commercial lenders.

The Myingyan IPP received strong support from Singapore-based expertise from as early as the pre-bidding stage to the current commercial operation stage. In addition to having Sembcorp as the sponsor, the Myingyan IPP’s construction was done by a group of Singaporean contractors (e.g. Jurong Engineering), received advisory from Singapore-based professional services providers (e.g. Mayer Brown JSM) and was financed significantly by Singapore-based commercial lenders (e.g. Clifford Capital, DBS and OCBC).

In particular, Clifford Capital, a Singapore-incorporated structured finance solutions provider, played a pivotal role in coordinating the development of the pre-tender and post-tender financing structure and led the legal due diligence for the lenders. As the documentation bank, Clifford Capital led the structuring and negotiation of the financing documents on behalf of the lenders. Clifford Capital also advised on the bankability and led the lender-side inputs into the key project agreements that included the power purchase agreement and the Build-Operate-Transfer agreement.

This project is a landmark transaction for Myanmar as it establishes a set of benchmark-setting bankable project documents which can form the precedent for future instances of independent power project financing in the country.

 

Source: Sembcorp, Clifford Capital