The International Finance Corporation is to advise the Ministry of Construction on a 20.5-kilometre elevated toll road project in Yangon in which the private sector is expected to invest up to US$400 million, the World Bank Group member has announced.
An advisory services agreement to design and implement the public-private partnership transaction for the project was signed with the ministry on January 11, IFC said in a statement.
The ministry had appointed IFC as the exclusive lead advisor for the project to build the four-lane toll road, it said.
IFC said that as part of the transaction, it would undertake due diligence and draft an internationally competitive tender to choose a qualified, experienced private sector developer for the project.
The expressway project is expected to foster economic development by improving connectivity between Yangon Port and Thilawa Special Economic Zone in the south, and Yangon International Airport, Yangon Industrial Park and the Yangon-Mandalay expressway in the north, IFC said.
It would also help to cut losses arising from lower productivity and higher vehicle operating costs due to heavy traffic congestion on north-south routes in Yangon, it said.
“Large-scale investment in infrastructure, especially in key transport areas, is critical for Myanmar’s sustainable economic growth as it improves the country’s access to markets and social services,” said U Kyi Zaw Myint, the ministry’s deputy director general planning.
“With IFC’s extensive experience in PPP transactions, if the project is successfully tendered and implemented, it could be used as a model for implementing the other segments of the planned inner and outer ring roads for Yangon,” he said.
IFC said Myanmar needed to invest an estimated $48 billion in transport infrastructure until 2030.
It said the expressway project would require between $350 million to $400 million in private sector investment in Yangon’s road infrastructure, which would help to reduce the capital investment burden on the government.
The tender for the winning bidder was expected to be granted by early 2019 and the road would be built over two to three years, IFC said.
“With IFC’s PPP transaction advice, the project will be structured in line with international best practices to create a competition-enabling market for qualified investors to come in,” said Mr Vikram Kumar, IFC country manager for Myanmar.
“As the first greenfield road PPP project adopting best international practices in Myanmar, it will set a precedent for developing transport PPP transactions to attract private sector investments,” Kumar said.
“In addition, while improving connectivity and mobility for people and businesses across sectors, it will enhance the country’s competitiveness and productivity,” he said.
In November 2015, the ministry received a proposal to build a 20.5-km four-lane expressway linking downtown Yangon with Mingalardon Gardens north of the city as part of a project for a highway between the commercial capital and the proposed Hanthawaddy airport, near Bago.
The proposal, submitted by Myanmar conglomerate Capital Diamond Star Group and South Korean companies Lotte E&C and Halla Corporation, costed the expressway at $620 million, Myanmar Times reported at the time.
The Hanthawaddy airport project has been plagued by delays since it was first proposed in 1992, mainly over arranging finance.
An IFC representative said the route in its proposal would be the same as the eastern ring road proposed in the Yangon Urban Transport Plan prepared by the Japan International Cooperation Agency.