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1/ The Ministry of Electricity and Energy opened bids for its 1GW solar tender today. Chinese bidders won nearly all of the 29 sites (one other site received no qualified bids). A few thoughts below on this process and what it means for #Myanmar.
2/ Tender announced in May, in the middle of pandemic, with one month deadline. After an outcry, deadline was pushed back a month. Big problem was that tender rules required bidders to secure land (buy or lease) before submitting a bid. https://www.frontiermyanmar.net/en/its-totally-outrageous-investors-urge-review-of-solar-tender/
3/ Despite the one month delay it was impossible for most foreign bidders to actually get into the country before the deadline. Travel around the country also severely restricted, making land deals difficult. Monumental effort to submit even one bid - 155 were received in all.
4/ Most bids from Chinese companies/consortiums. Almost no Western participation. Most bidders no IPP experience eg inverter maker Sungrow bid on 24/30 sites. EPC contractor CMEC 15. No idea how it was possible to put together so many bids in short time. https://www.frontiermyanmar.net/en/chinese-companies-dominate-bidding-for-myanmars-billion-dollar-solar-tender/
5/ Unclear how many companies met technical criteria, but seems to be around two-thirds of bidders. Criteria included annual turnover, track record as IPP developer. This seems to have knocked out companies like Myanmar’s KT Group, which submitted 10 bids.
6/ Bid opening got underway this morning via video link (NPT under quarantine). Chinese companies submitted the lowest bids for nearly all sites. Game over. Under tender rules the lowest bid wins - no weighting for technical side of proposals.
7/ Sungrow, CMEC and SPIC (of Myitsone fame) have won nearly all sites. Myanmar company Shwe Taung won several sites. Bids are low, in the 3-5c range. This would be well below Myanmar’s average cost of supply, so should help to dampen rising costs of delivering power.
8/ Some argue number of bids shows tender worked. Prices are also low - but are the proposals well designed? Many problems with draft PPA. Bidders have only six months to complete projects. Too early to say how this will play out, plenty of pitfalls ahead
9/ Like the tender deadline, six months is ridiculously short. Argument from ministry seems to be they need the power for next hot season (April). But emergency power projects (also flawed process) should be online by then at full capacity (900MW). COVID likely to depress demand.
10/ Tender timeline never realistic, already two months behind original schedule. Trying to complete 29 projects simultaneously will create bottlenecks. Delays and renegotiations likely. Also expect complaints from locals over rushed land acquisition.
11/ Design was similar to the emergency power tender last year. Remember how that went? CNTIC/VPower missed the hot season deadline, don’t seem to have been fined, still not operating close to full capacity. Expect more of the same. https://www.frontiermyanmar.net/en/delayed-lng-projects-set-to-deliver-first-power-as-govt-approves-contract/
12/ Tender could even discourage potential investors in solar power in future, too - why will companies bother to waste the time/effort/money developing solid proposals when the ministry calls snap tenders like this?
13/ There was an opportunity to do this differently - it could have been the NLD’s telecoms tender. Many companies submitted solar proposals over past decade but been blocked by the ministry. Only two solar PPAs signed, just 40MW installed, despite huge potential and interest.
14/ Government should have intervened to ensure tender run properly. Separate part of MoEE was working on solar tender design with support from NZ. Unclear why that was abandoned. Getting a seemingly positive outcome from a highly flawed process does not represent progress.
Thanks if you got this far, stay tuned for more on this from @FrontierMM
