Increased power production in Myanmar with Norwegian state guarantee

The sale of three gas engines for use in a power plant in the Yangoon area in Myanmar was completed this month when GIEK issued a guarantee for a local power production company. This mark the first export supported by a GIEK guarantee since Myanmar opened up to the outside world in 2011.

-This is a very pleasant deal to close. GIEK has worked hard and thoroughly with Myanmar over the last year, and to finally close the first export deal feels good, says Director of Energy and Industry Øyvind Ajer in GIEK.

Electricity is important

Electricity is a key element for Myanmar’s further development. A great part of the country’s infrastructure is old and torn, and the expected high growth the will lead to a doubled electricity demand every fourth year.

-We observe this in many countries where Norwegian suppliers are involved in the local electricity sector, not least in Africa and Asia. Electricity is one of the most important tools for creating economic growth and prosperity, says Ajer.

Ajer underlines that the guarantee is issued on commercial terms.

-GIEK is not an aid institution, we issue guarantees based on commercial perspectives, not unlike the way banks operate. The risk in an emerging market like Myanmar is naturally higher than in established markets. GIEK has standard routines concerning corporate social responsibility and anti-corruption in financial transactions, and mad even further investigations in the case of Myanmar, says Ajer.

Good relationship

The relationship between Norway and Myanmar, or Burma as the country was previously called, has traditionally been very good, and Norwegian investments have been very welcome. Myanmar is politically high up on the agenda in Norway, and Telenor is among the largest foreign investors in the country.

GIEK has also worked extensively to prepare the ground for Norwegian companies in Myanmar, something that has passed unnoticed in the region.

-GIEK has had regular meetings with several of the largest banks in Singapore, and they have all noticed GIEK’s active approach to Myanmar, says Ajer.

A pleased Minister

Minister of Trade and Industry Monica Mæland (H) is pleased that the Norwegian export industry is now getting a serious foothold in Myanmar.

-Both effort and innovation are important if Norwegian companies are to succeed internationally. It is a good sign that Bergen-based Rolls-Royce now uses our schemes to enter a new and exciting market like Myanmar. Norwegian state guarantees helps secure financing and closing deals. GIEK contributes to a strengthened Norwegian competitiveness and create jobs, says Mæland.

May need more guarantees

In Bergen, the exporter is happy to have closed this deal.

-Rolls-Royce appreciates GIEK’s and UOB Singapore’s efforts to secure financing for the Hlagwa Power Plant project in Yangon, Myanmar, says Bergen Engines CEO Jeff Elliott.

Bergen Engines is a subsidiary of Rolls-Royce Power Systems in the Land and Sea division of Rolls-Royce. The company has signed a long-term service agreement with the owner of the gas power plant in Myanmar. Several more export guarantees may therefore be needed in the time ahead.

-Now that GIEK has approved this market, we are looking forward to presenting GIEK with new projects, Elliott rounds off.

See also press release issued by the Ministry of Trade, Industry and Fisheries (in Norwegian).