US fund backs $480m Myanmar solar project

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The U.S. made clear this week its intention to assist Myanmar’s inaugural foray into solar energy with the announcement that U.S.-based ACO Investment Group is to finance two large-scale PV plants in the country.

U.S. Trade Representative Michael Froman revealed details of the $480 million project on Thursday, alongside ACO Investment MD, Hari Achuthan. The project to construct two 150 MW solar PV plants in Myanmar’s northeastern Mandalay region is expected to be completed in 2016 and, when finished, will account for 12% of the country’s power generation.

ACO Investment has secured interest from institutional investors in the equity component of the deal, thought to be worth around $150 million. The company is also in talks with additional development finance institutions to cover the outstanding balance.

During construction, around 400 jobs will be created in Myanmar, with an additional 100 permanent jobs following thereafter. The project will be one of the largest U.S. investments in Myanmar (also known as Burma), adding to the $800 million of direct U.S. investment poured into the country since sanctions were lifted in 2011 when the military government stepped aside.

Alongside funding, USAID has worked with Myanmar officials to strengthen labor laws and working conditions, a move that will hopefully pave the way for further foreign investment in a country that was politically and economically cut off from the outside world for five decades.

"Efforts like these support the ambitious definition of development that is at the heart of President Obama’s trade agenda," said Froman. U.S. Commerce Secretary Penny Pritzker believes that Myanmar can play a valuable part in Asia-Pacific growth over the next decade, which is expected to soar nearly 2 ½ times today’s level by 2022.

The Asian Development Bank has already been active in Myanmar. In May it acquired a $2 million grant to deliver off-grid solar power to 25 villages in the country. Currently, much of Myanmar’s power generation comes via hydropower, which decreases in output and efficiency during the country’s lengthy dry season, leading to long power outages.