By Victor V. Saulon, Sub-Editor
LISTED conglomerate Ayala Corp. said on Monday that its energy company has partnered with Yoma Strategic Holdings Ltd. to jointly explore developing 200 megawatts (MW) of renewable energy projects in Myanmar.
It told the stock exchange that its unit AC Energy, Inc. and Yoma Strategic are looking to create a 50-50 joint venture (JV) that will see them working together to drive the growth of Yoma Micro Power (S) Pte. Ltd.
The two have signed a binding term sheet to invest at least $30 million in the venture. The partnerhip includes looking into participation in large utility scale renewable projects.
Patrice Clausse, chief operating officer of AC Energy Renewables, described the partnership as a step towards AC Energy’s 2025 goals.
“This is a very meaningful investment for AC Energy, as we intend to participate in Myanmar’s renewables sector in a significant way. We are delighted to partner with Yoma Strategic who shares the same aspiration to build a meaningful portfolio in renewable energy and together, be able to contribute to creating an environmentally sustainable future,” he said in a statement.
“Our combined expertise, strong financing capabilities and AC Energy’s commitment to shore up presence in the fast-growing region will provide a critical platform for growth in the country,” he added.
Ayala Corp. quoted Melvyn Pun, chief executive officer of Yoma Strategic, as saying: “Supply of electricity is one of the largest opportunities in Myanmar and also one of the biggest bottlenecks for economic development. We are excited to have AC Energy as our partner to drive sustainable and inclusive economic growth.”
Mr. Pun said AC Energy’s international expertise in the renewable energy sector and the access to funding “will be invaluable as we work together to service this huge, underserved market in Myanmar.”
The partners cited World Bank estimates that say electricity consumption in Myanmar will grow at an average annual rate of 11% until 2030 to achieve complete electrification in all households with an expected investment of around $2 billion per year required.
They said the Myanmar government’s energy master plan envisions solar power contributing up to 5% of electricity as the country shifts away from hydropower and natural gas sources.
They added that the Myanmar government’s recent increase in electricity tariffs has also enhanced the attractiveness of solar energy solutions to the commercial and industrial segment.
“The renewable energy sector is a scalable business which has the potential to generate a sizeable revenue stream with recurring cashflow to complement Yoma Strategic’s core businesses. Myanmar has one of the lowest electrification rates in Asia, with more than 60% of the population without access to grid electricity, particularly in rural areas. There is a need to significantly increase generation capacity and build out last mile distribution infrastructure, which Yoma Micro Power has embarked upon,” Mr. Pun said.
At present, Yoma Strategic holds 35%, while Norfund and International Finance Corp. hold 30% each in Yoma Micro Power. The remaining 5% is held by Alakesh Chetia, the managing director of Yoma Micro Power.
After the investment and restructuring, which is planned for 2020, the joint venture is expected to hold at least 50% of Yoma Micro Power.
Yoma Micro Power builds micro power plants and mini-grids that provide electricity to off-grid rural communities and telecommunications towers in Myanmar.
Yoma Micro Power is rolling out 250 micro power plants by end-2019 and is expected to scale up to more than 2,000 sites by 2023.