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India Firms Win Contract to Supply Gas to New Yangon City Project
A consortium formed by Indraprastha Gas Limited and Gail Consortium (IGL Consortium) was chosen by the New Yangon Development Company (NYDC) to supply and distribute natural gas to the New Yangon City project.
Together with this announcement, was the appointment of the consortium which will be responsible for power supply and distribution – Thailand state-owned PTT Group comprising of PTT and its subsidiaries, PTTEP (PTT Exploration and Production) and GPSC (Global Power Synergy Public Company). PTT was formerly known as the Petroleum Authority of Thailand.
Gail (India) Limited, headquartered in New Delhi, is the largest state-owned natural gas processing and distribution company in India. Indraprastha Gas Limited (IGL) is a publicly listed company which started as a joint venture between Gail, Bharat Petroleum and the National Capital Territory of Delhi, formed to install and operate the Delhi gas distribution system.
New Yangon City project is a major urban planning project proposed by the Yangon region government, led by Chief Minister U Phyo Min Thein. NYDC is a special company incorporated by the Yangon region government in March 2018 to undertake the development of the Yangon New City as a public-private partnership.
The selection is just the start of a longer process where the two selected consortia will have to carry out preliminary work and feasibility studies to prepare pre-project documents including technical and financial proposals, and business modelling. This will be used for conducting a further tender exercise called the NYDC Challenge. The NYDC Challenge is an adaption of the Swiss Challenge which is a not very commonly used public procurement system where bids are published, and other parties are invited to match or better it.
As part of the NYDC Challenge, the two originally chosen companies will be allowed to match the offer of other bidders or drop out of subsequent stages of the contract. If another party is awarded the contract, that party will be obligated to reimburse all costs incurred in connection with the project till then.
According to Myanmar publication The Irrawaddy, the Thai and Indian companies were selected from among 77EOI (expression of interest) submissions from 45 companies and consortiums who expressed an interest in tendering for the new city’s Stage 2 Infrastructure Projects. Stage 2is to be developed between the Dalla Township and the Gulf of Martaban and will include power supply and distribution, natural gas supply and distribution, cyber connectivity, public transport, waste management, and a convention and exhibition center.
Earlier in April last year, the NYDC had already signed a framework agreement worth USD1.5 billion with China Communications Construction Co. Ltd (CCCC) in April for Stage 1 Infrastructure Projects. This was criticised for being done without a tender. Stage 1 development includes five villages and townships, two bridges, roads, power plants, and power distribution facilities, water, and wastewater treatment plants and a 10-square-kilometer industrial estate. It is slated for completion by 2020.
In response to criticism about the lack of transparency, Serge Pun, the CEO of NYDC, said that CCCC has submitted its PPD (pre-project documents) to the Union Attorney General’s Office for review.
The New Yangon City development was launched last year and plans to develop the new city on 20,000 acres of farmland from downtown Yangon across the west bank of the Yangon River between the Hlaingthaya-Twante motorway and Seikkyi Kanaungto Township. At the launch ceremony in March, Chief Minister Phyo Min Thein said that the new city will create 2 million jobs while also reiterating that NYDC is fully owned by the municipal government. The project is still awaiting the Union government’s approval.
Despite the regional government’s enthusiasm for the project, the new city has been shrouded in controversy from the beginning. The location of the project was not considered for development in the 1980s and 1990s by the Ministry of Construction because it is flood-prone. The regional government was also suspected of abusing its power by investing USD6.5 million in the project without the regional parliament’s prior approval. In addition, the appointment of Chinese firm CCCC in the Stage 1 Infrastructure Projects has not been without alleged suspicion of impropriety.
Countering this, NYDC said it had worked with Dutch engineering consultant with Royal HaskoningDHV to carry out a flood-risk assessment for the New Yangon City project area. With regards to the controversial Chinese firm’s selection, CEO Serge Pun commented that it would be required to stay on the right track when working with the NYDC during a recent public consultation meeting.
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