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Preliminary Regulatory and Legal Frameworks for

Myanmar’s Power sector 27 January 2014

website: www.lshorizon.com email: information@lshorizon.com

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LS Horizon (Myanmar) LimitedLS Horizon Limited is a regional law firm with offices in Thailand, Lao PDR and Myanmar and an associated firm in Singapore, which is capable of delivering international quality legal services.

The lawyers of LS Horizon have extensive experience in leading and handling landmark transactions in Thailand and other Asian countries.

Growing each year, LS Horizon currently has more than 60 lawyers, including foreign attorneys with previous experience at top-tier international law firms and capable of handling sophisticated legal transactions.

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1. On-Grid Power Distribution Structure2. Electricity Law Enacted in 19843. Private Participation 4. Power Purchase 5. Competition6. Basic Steps to Develop Power Project in Myanmar7. Key Governmental Authorities for Power Project

Development8. Key Project Documents9. Q&A

Outline

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1. On-Grid Power Distribution Structure

IPP

Myanmar Electric Power Enterprise

Electricity Supply

Enterprise

Yangon City Electric

Supply Board

For further distribution

End Users in Other Areas

Ministry of Electric Power

Own generation

Own generation Own generation

End Users in Yangon Area

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2. Electricity Law Enacted in 1984The Union Government (cabinet)’s permission is necessary to carry out the following activities:

(a) Exploration of resources for electricity generation(b)Generation of electricity(c) Transmission of electricity(d)Distribution of electricity

To the following organization and individuals(e) State-owned Utilities(f) State-owned Industries(g) Legal Cooperative Groups(h)Legal Private Organizations(i) Other Organization

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3. Private Participation

• Private participation in electricity generation sector is already allowed,

but it is essential to get the permission from the government as required by Electricity Law and State-owned Enterprise Law

• Application will be submitted to cabinet meeting during the process of

the consideration for the approval of the Myanmar Investment Commission

• Local investors are allowed to participate in the scheme of independent power producer (IPP)

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4. Power Purchase

• Not stated specifically in Electricity Law

• It is a normal practice between Ministries and among the state-owned organizations to obtain the approval of the Union Government

• According to the Board of Yangon City Electric Power Supply Law, YESB can purchase electricity at the price approved by the Ministry.

• Nowadays, only small scale power project has been approved to sell abroad.

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5. Changes in Laws and Regulations

• Policy of Myanmar Power Sector is changing gradually towards privatization.

• The current system mostly applying to the electricity generation industry is Build-Operate-Transfer (BOT) system.

• With the cooperation of Asian Development Bank and the Government of Norway, Myanmar government considers to revise and amend the legislation in relation to the electricity industry.

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6. Basic Steps to Develop Power Project in Myanmar1. Permit under Foreign Investment Law is necessary for foreign investor

who would like to invest in power project due to privileges available in such law.

2. To obtain such permit, the investor needs to obtain the approval of the government through the Ministry of Electric Power (MOEP) and conduct EIA and SIA. The Government may require a joint venture investment between state-owned enterprise or local company and the foreign investor based on case-by-case basis.

3. Signing MOU and MOA is the practice that Ministry of Electric Power requires as the conditions before entering into BOT agreement (formerly known as Joint-Venture Agreement)

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6. Basic Steps to Develop Power Project in Myanmar (Cont.)4. Relevant parties need to negotiate the draft of relevant agreements

(e.g. joint-venture agreement, BOT agreement, loan agreement etc.) and submit the final draft thereof altogether with MIC permit application for consideration of MIC.

5. MIC application and relevant agreements will also be considered by the Attorney-General's office and other relevant departments notwithstanding the government participation in the project.

6. The Government will consider the opinion provided by relevant ministries, especially Ministry of Electric Power, before granting the approval of power project.

7. MIC will decide to provide the privileges to the project based on the opinions provided by the relevant ministries.

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• Ministry of Electric Power (MOEP) which is the regulatorfor transmission system and IPP

• Ministry of Energy (in case of petroleum fuel-fired power plant)• Ministry of Industry (in case of solar power plant)• Ministry of Mines (in case of domestic coal-fired power plant)• Myanmar Investment Commission (MIC)• Ministry of National Planning and Development• Ministry of Environment Conservation and Forestry• Myanmar Electric Power Enterprise (MEPE)• Electricity Supply Enterprise (ESE)• Yangon City Electricity Supply Board (YESB)• Local Governments (e.g. State Government)

7. Key Governmental Authorities for Power Project Development

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8. Key Project Documents

• Joint Venture Agreement•BOT Agreement•Power Purchase Agreement•Gas Supply Agreement•EPC Contract•O&M Agreement

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Q&A

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THANK YOU