According to a release on September 29 by the Beijing-based lender, the loan will be used to fund a 225 MW Combined Cycle Gas Turbine Power Plant in Myingyan, Mandalay Region. The project will be the largest gas-fired independent power plant in Myanmar and will “help to ease the country’s severe power deficit.” It is being co-financed with other multilateral development and commercial banks, the release said.
The announcement came at the same time that AIIB said it will also supply a $300 million loan for a hydropower project in Pakistan, in collaboration with the World Bank.
“The two projects, both in the energy sector, will help to ease the severe power deficit in both countries and contribute to the core mandate of AIIB to support green and cost effective infrastructure,” said AIIB President Mr Jin Liqun.
Founded in January this year, Liqun said that the loans will help the lender reach its target of issuing $1.2 billion in loans during its first year of operation. Since its foundation, it has approved more than $500 million in loans for projects in Bangladesh, Indonesia, Pakistan and Tajikistan. A third batch of loans is expected to be announced before the end of the year.
Initiated by the Chinese government in collaboration with 56 other member states, other major backers include India, Russia and Germany. Notable absentees from the fund include the United States and Japan, the former who has expressed concerns that the fund would have high standards of governance as well as environmental and social safeguards.
On September 20, the government approved $185.5 million worth of loans from the Asian Development Bank, to fund projects in the areas of health, sports, education, livestock and irrigation.