The mismanagement of the Yangon-Pathein highway has raised questions about build-operate-transfer contracts awarded to private companies by the former junta.
By KYAW YE LYNN | FRONTIER
WHEN YANGON resident Ko Thiha decided to return to his village in Ayeyarwady Region’s Ngapudaw Township this Thadingyut, he knew it wasn’t going to be easy. Like him, tens of thousands of migrants would also be looking to make a short trip back home in late October for the festival, which marks the end of wa dwin, sometimes referred to as Buddhist Lent.
Thiha’s destination was Kyauk Kalat village, which he had not visited for almost a year since starting work as a trainer at an electronics school in Yangon. “I promised to spend the Thadingyut holiday in my home village,” he said.
Just getting a seat was difficult; he eventually managed to get one, but it cost K7,000 – nearly double the standard fare. He was glad he had decided not to bring his wife and two children with him.
The bus left Yangon about noon on October 23 and arrived at Pathein at 8.30pm, about three-and-a-half hours behind schedule. The late arrival meant that Thiha missed a ferry connection. “I was disappointed at having to spend a night in Pathein,” he said.
The delay was caused by the poor condition of the highway between Yangon and Pathein, which also affected holidaymakers bound for the beaches at Ngwe Saung and Chaungtha.
Bus drivers at the Dagon Ayeyar Highway Bus Station blamed the delays on road repairs taking longer than usual during the Thadingyut holidays.
Ko Khin Hlaing, who drives for the Kan Htoo Aung express bus line, said the work had blocked one lane of the two-lane highway and the resulting congestion had caused long delays.
The condition of the highway was the worst Khin Hlaing has seen since after Cyclone Nargis in 2008, when its surface was badly damaged by frequent convoys of trucks delivering aid to survivors.
“It usually takes four-and-a-half hours to travel between Yangon and Pathein but it took up to nine hours during the recent holidays,” he said.
The road, he said, “was like the surface of the moon”.
Enter the private sector
Decades of underinvestment have meant that highways and other infrastructure in Myanmar lag behind that of other countries in the region. The situation is exacerbated by the climate, with poorly built thoroughfares being susceptible to damage during the rainy season when the foundations of many roads are weakened by waterlogging.
In the 1990s, the military junta began awarding private companies the right to collect tolls on many of the country’s major highways in exchange for taking care of maintenance under 40-year build, operate and transfer (BOT) contracts. In April 2008, the Yangon-Pathein-Ngwe Saung Highway was assigned to Oriental Highway Co, Ltd, a subsidiary of the Asia World Group of Companies (the company says it is no longer part of the Asia World Group).
Around 30 percent of the national highway network – more than 6,000km – is now managed under BOT contracts. While this has reduced strain on the national budget, it has also resulted in frequent complaints about lack of maintenance.
In recent years the BOT contracts have come under intense scrutiny, with lawmakers calling on the government to cancel the contracts in cases where the licensee has failed to properly maintain the road.
In August, Pyithu Hluttaw representative U Kyaw Swe Win (Kawhmu, National League for Democracy) said the government should take legal action against companies that do not abide by the terms of the BOT contracts.
“Most are haphazardly maintaining the roads but are still collecting road tolls, which is highway robbery,” he was quoted as saying by the Myanmar Times. He singled out the Yangon-Pathein and Mandalay-Muse highways – both of which are operated by Oriental Highway – as examples.
In a 2016 Transport Sector Policy Note on trunk roads, the Asian Development Bank said the template BOT contract used by the Department of Highways was “deeply flawed” and “often far removed from best practice”.
“Overall, the contracts in use leave excessive room for government discretion and open-ended renegotiations. This can lead to corruption, non-transparent arrangements, multiple contract renegotiations without any clear basis for renegotiating, frequent conflicts and poor performance,” the policy note said.
It said low fixed toll rates meant many of the concessions were unviable and as a result contracted roads were often in poor condition. However, with more than 4,000 vehicles per day (excluding motorcycles), the Yangon-Pathein Highway is among the more heavily used highways in the country, and the policy note suggested that roads with more than 2,500 provided sufficient income to cover maintenance.
The policy note recommended a number of changes to the BOT contracts as well as greater investment in road infrastructure overall. This investment should focus on major national highways, including the Yangon-Pathein Highway, it said.
Lack of maintenance
Highway bus drivers and lawmakers told Frontier that the poor state of the Yangon-Pathein Highway was the result of a lack of maintenance by Oriental Highway. Ayeyarwady Region MP U Kyaw San (Nyaungdon-2, NLD) said it did little repair work during this year’s rainy season, apparently letting the highway deteriorate.
The condition of the highway had contributed to a higher accident rate during the rainy season, he added. On August 13, former political prisoner and 88 Generation activist Daw Than Than Aye, better known as Ma Mee Mee, 47, was killed in an accident on the highway in Kyaunggon Township.
Angry posts on social media after the accident blamed it on the condition of the road. Nearly a month later, Oriental Highway handed the road back to the Department of Highways under the Ministry of Construction. The maintenance conducted during Thadingyut was carried out by the department rather than Oriental Highway.
“The condition of the road was worsening, but the company did nothing,” Kyaw San told Frontier in a telephone interview on November 5. “This meant that the road was in extremely poor condition when it was handed back to the government.”
Oriental Highway project director U Tin Ko Ko said the handback on September 3 followed a request from the ministry and had nothing to do with the accident that killed Ma Mee Mee.
He said the company had agreed to return the highway temporarily so it could be upgraded with a loan from the ADB.
“The ADB loan is to the government, so according to procedure the ministry is taking the road back to upgrade it with an ADB loan and then will allow us to operate it again,” he said.
Tin Ko Ko declined to discuss the negotiations between Oriental Highway and the ministry, saying they were continuing. He said the BOT contract had been signed in 2010.
But he defended the condition of the road, saying the company had invested heavily in repairing damage caused by heavy vehicles carrying aid to Nargis survivors and since then on maintenance work.
Tin Ko Ko said Oriental Highway was focusing on upgrading roads in upper Myanmar that it operates under BOT agreements, including the Mandalay-Lashio-Muse highway.
After upgrades on the company’s roads in upper Myanmar were completed in about a year it planned to upgrade its roads in lower Myanmar, he said.
The Department of Highways also confirmed that it was negotiating with Oriental Highway over its temporary control of the highway. Chief engineer U Oo Saw Thein said the government wanted to upgrade the highway as soon as possible. “The details for the BOT contract amendment have yet to be discussed,” he said.
Once the upgrade is completed, though, Oriental Highway will be allowed to resume operating the highway and collecting tolls, he added.
Oriental Highway will then be allowed to keep an agreed amount of toll revenue to cover its operating costs. The remainder will be placed into a bank account jointly opened by Oriental Highway, the Department of Highways and the ADB, and this will be used for repaying the loan, he said.
In March, the Pyidaungsu Hluttaw approved a request from the Ministry of Construction for a US$360 million loan from the ADB and ASEAN Infrastructure Fund to upgrade three roads. These are the Yangon-Pathein Highway, the Bago-Thanlyin Road and a 64km section of the Yangon-Mandalay Expressway.
The deputy minister said the Ministry of Construction had coordinated with Myanmar Investment Commission to transfer the Yangon-Pathein Highway from Oriental Highway back to the ministry “by the step in/step out method”, the state-run Global New Light of Myanmar reported at the time. It said the agreement for the project will confirmed by the Union Attorney General’s Office.
Documents on the ADB website show that it had originally planned to provide a loan to rehabilitate 177 kilometres of the Yangon-Pathein Highway. A September 2017 Initial Environmental Examination said the project would see the road resurfaced with asphalt concrete and widened to two lanes with paved shoulders. A 20km flood-prone section would be raised by about two metres, while five bridges would be replaced and a new bridge constructed.
However, the loan for the Yangon-Pathein Highway rehabilitation – part of a broader Greater Mekong Subregion Highway Modernization Project – was deferred for unspecified reasons. An updated Initial Environmental Examination published in October made no mention of the project. Frontier emailed the ADB questions about the project but did not receive answers by deadline.
But Ayeyarwady Region Minister of Electricity, Industry and Transportation U Win Htay insisted that the ADB was committed to rehabilitating the Yangon-Pathein Highway and had identified it as a priority among other potential road projects in Myanmar.
“Both the government and ADB want to upgrade the road as soon as possible,” he said.
Some question though whether the existing highway should be upgraded at all. One prominent figure in the construction sector, who spoke on condition of anonymity, said the highway was not suitable as an expressway because it has many curves and bends and runs through many towns and villages.
It would make more sense to build a new highway rather than upgrading the existing one, he said, and this could potentially cut travel time from Yangon to Pathein to less than two hours.
“The need for better infrastructure is unavoidable because local and foreign investors are eyeing Ayeyarwady Region.”
However, current traffic levels on the highway do not appear to warrant a new alignment. The ADB policy note suggests that experience in neighbouring countries shows that at least 15,000 vehicles a day are needed to justify a four-lane road – more than three times the number that travel between Yangon and Pathein at present.
‘It’s like a double loss’
Win Htay said the highway was being repaired by seven special Department of Highways teams: five from Ayeyarwady and two from Yangon.
Work got underway in September using the ministry’s budget and additional funds had been allocated in the 2018-19 fiscal year for repairs, he said. Since the ministry took over the road it had stopped collecting tolls.
He expressed frustration with Oriental Highway, saying that its lack of maintenance had left the government with little choice but to take charge of the repair work itself.
“At the end of the monsoon season, the road was in such a poor condition it was not ready to be upgraded through the ADB loan,” he told Frontier in an interview at his Pathein office. “It’s like double loss … The government has to repair the road under its own budget, but the road is toll-free.
“If we had not have taken it back though, the upgrade would have been delayed. So we felt it was the best option.”
Win Htay said the upgrade would begin with a feasibility study and the entire rehabilitation project could be completed within two years.
However, Tin Ko Ko from Oriental Highway said the upgrade may take longer than expected, in part because of the need to shift a natural gas pipeline from the Nyaungdon field.
Myanma Oil and Gas Enterprise declined Frontier’s request to interview the officer in charge of the Nyaungdon field to ask how many kilometres of pipeline would need to be relocated.
A staff member who asked not to be named said small oil pipelines are present along the highway near Nyaungdon, and a natural gas pipeline runs along the road from Nyaungdon to Yangon.
Win Htay said the highway was used by thousands of vehicles each day – and many more on weekends and holidays like Thadingyut. “It’s a major highway,” he said, “so everybody wants it back in good condition as soon as possible.”