Chinese make move: MDX, Ratchaburi face threat in huge power schemes

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The Nation 21 November 2007

In china's quest for energy security, Chinese companies have penetrated into the power-generating business in Burma and Laos, a move which could threaten the presence of Thai companies operating in the countries.

Agence France-Presse reported that the semi-official weekly Myanmar Times said on Monday that a Chinese power company had joined the Tasang Dam project in eastern Shan state on the Salween River, the longest undammed river in Southeast Asia, taking up a 51-per-cent stake.

Quoting a Burmese official, the paper said Thai company MDX's stake was now reduced to 24 per cent, with the government holding 25 per cent. MDX declined to confirm the report.

An MDX official also told the news agency that it was considering reducing its stake in the controversial hydropower project, the biggest in the military-run country.

"We are looking for a business partner to go ahead with the project, and we are considering reducing our stake," the official said on condition of anonymity.

MDX has invested about US$6 billion (Bt203 billion) in the Tasang Dam project.

The Thai company has held an 85-per-cent stake in the project, with the rest owned by Burma's military government, which is under global pressure over its deadly repression of pro-democracy protests in Rangoon in September.

Agence France-Presse also quoted state media as reporting in April that the Tasang Dam's construction began in March. With a capacity of 7,110 megawatts, the project is scheduled for completion in 2022. Thailand is expected to receive 85 per cent of the electricity from the hydropower dam, with the rest going to Burma.

Three more dams on the Salween near the Thailand-Burma border are in the pipeline, mostly backed by Chinese state-owned energy companies.

The US and Europe have imposed economic sanctions against the junta due to its human rights abuses and the ongoing detention of democracy leader and Nobel peace laureate Aung San Suu Kyi.

But energy-hungry neighbours like Thailand, China and India are keen to exploit the country's abundant natural resources, including energy, natural gas and timber, throwing an economic lifeline to the military junta.

Meanwhile, in Laos, a Chinese company has also shown interest in joining Ratchaburi Electricity Generating Holding, Banpu and the Lao government in the $2.6-billion Hongsa Lignite power project.

Ratchaburi and Banpu Power will hold 40 per cent each in the project while the Lao government will take up 20 per cent. Ratchaburi would also invest in another joint venture with Banpu to develop a coal mine in Laos, which would supply the power plant. The firm and Banpu would each hold a 37.5-per-cent stake in the joint venture, while the Lao government would hold the rest, the statement said.

In the case of investment from the Chinese company, Ratchaburi's stake in the power plant and mining venture would be reduced to 30 per cent and 28.125 per cent, respectively, Ratchaburi said in a statement.

Deputy managing director Thawat Vimolsarawong said recently that equity participation from the Chinese company was a condition of the Lao government. He had no knowledge of the name of the Chinese investor.

The Hongsa plant is expected to begin selling power to the Electricity Generating Authority of Thailand in March 2013. With a 40-per-cent stake in the project, Ratchaburi's combined capacity would increase from 661 megawatts to 5,160.