B1.4bn loan for Myanmar power grids
A concessional loan worth 1.45 billion baht to help Myanmar improve its electricity system has been approved by the government, according to an official.
Rachada Dhnadirek, deputy government spokeswoman, on Tuesday said the loan is part of an initiative to strengthen ties with neighbouring countries.
The Neighbouring Countries Economic Development Cooperation Agency (NCEDC) will be responsible for arranging and extending the loan to Myanmar, Ms Rachada said. The money will target the construction and improvement of electrical substations and transmission systems in Yangon.
The official said that of the 1.45 billion baht, 729.12 million will come from an annual budget covering fiscal years 2021-2023, while the other half is to be borrowed from domestic financial institutions, with a five-year loan period. Bidding for the domestic borrowing will be held for institutions that can extend the best offers, she said.
Myanmar would be charged an interest rate of 1.5% per year with a 30-year contract which includes a 10-year grace period.
Under the terms of the loan agreement, 50% of goods and services in the power grid projects must come from Thailand. Myanmar must also enlist a Thai construction contractor and consultant engineer, while the rules governing the loan agreement must be issued by Thailand, Ms Rachada said.
"The granting of the financial aid to Myanmar is in line with the strategy to strengthen ties with neighbouring countries," she said. "It will also help support the production of goods and services by Thai entrepreneurs, and boost employment in Thailand."
"This will attract more Thai investors to Myanmar, as a result of the loan terms which require Thai goods and services worth no less than 50% of the contract's value to be used," Ms Rachada added.
Thailand is currently the third-largest investor in Myanmar after Singapore and China, she said.