Japan eyes Hantharwaddy airport construction project
The government is in negotiations with Japan for financing the construction of Hanthawaddy International Airport in Bago Region, after the original negotiations with a Singapore-led consortium fell apart in January, Transport Minister U Thant Sin Maung said on Tuesday.
“This project is not halted,” he said, noting that Japan is very interested in the project. “It must go on.”
U Thant Sin Maung said the original agreement for the construction of the airport was effectively cancelled because of financial issues.
“We could not reach agreement in negotiating such matters as cost estimates, duration for operations (of the consortium) and the means to pay back the loan,” he said. “Therefore, all sides happily ended the negotiations. It’s not ending the project.”
The minister said a mega-project like Hanthawaddy International Airport needs comprehensive long-term consideration, given the amount of total investment for the whole project is about US$1.5 billion (K2 trillion).
“The Japanese government is very interested in the project,” he added. “Since in the beginning, they offered us to invest half of the total cost of the project as loan. Now, we are negotiating the matter with them. It will become better off.”
The planned airport is 80 kilometres northeast of Yangon. Once completed, it is expected to serve 12 million passengers a year initially, and 30 million passengers eventually, and would help ease overcrowding at Yangon International Airport.
The consortium led by Singapore’s Yongnam Holdings won the US$1.5 billion bid to build the airport in 2014 after the deal previously given to Incheon International Airport Corporation was cancelled. The consortium also includes JCG Corporation of Japan and Changi Airport Planners and Engineers of Sinagpore.
U Ye Htut Aung, deputy director general of the Department of Civil Aviation (DCA), said the agency has not received any instructions from the government on how to proceed with the project.
“We don’t know if the government will invite new bids or ask for help from the Japanese government,” he said.
Speaking on why the framework agreement was not extended, he said the lack of strong financial backing for the project by the company led to the halt.
“The main problem is financing. The tender winner did not have enough money to manage the site, so we have to implement it with loans from the Japanese government,” U Ye Htut Aung said.
According to the statement of DCA, the government and consortium could not reach acceptable terms for an agreement. A concession agreement is a negotiated contract of a company and a government that grants the firm the authority to run operations under the approval of government.
The talks on the agreement started in January 2017, but ultimately failed after the two sides met at least five times.
“Before reaching agreement on important matters, the Framework Agreement of two years’ duration expired on January 30,” said the DCA statement.
Yumeto Ito, second secretary of the Japanese Embassy in Yangon, told The Myanmar Times that Japan is keen on resuming the project, but the Myanmar government would make the final decision.
“We are waiting for the decision of the Myanmar government on the construction of Hanthawaddy airport. The relevant departments from both sides are negotiating,” Ito said.
The decision will likely come from a national-level committee led by Vice President U Henry Van Thio that also includes union-level ministers, deputy ministers and director general of the DCA and the chief ministers of Yangon and Bago regions.
The committee is responsible to coordinate government ministries and regional and state governments to make a decision on the airport project and to monitor its progress. Above all, it is tasked with making national-level policy on the project.
U Win Thein, chief minister of Bago region said the committee has met a few times since its formation in November of 2016.
“We have not held meetings since the last time we met about one year ago, so I have no information about this,” the chief minister said, but expressed hope the construction of the airport would soon commence as this would boost the local economy.
Vice President U Henry Van Thio, chair of the committee that visited the site in December 2016, said there was ‘an urgent need’ for building a high-quality airport for international passengers and cargo, which are beyond the capacity of Yangon International Airport.
He also pledged that the project would be “implemented” during the present government, considering that it’s a national project.