Leaked docs have revealed the enormous profits made by foreign state-controlled companies which own the pipelines exporting Myanmar’s natural gas.
In just three years between 2017-19, two pipelines to Thailand and one to China earned investors a total of $1.11 billion in dividends, according to leaked corporate records seen by Myanmar Now.
Of this $1.11 billion, Myanma Oil & Gas Enterprise (MOGE), now controlled by the junta, only pocketed US$168 million.
Pipeline companies derive their revenue from gas company subsidiaries including MOGE paying them to transport gas.
The scale of pipeline profits is significant because they appear to reflect the lucrative scale of the fees charged by the operators to Myanmar’s gas exporters: the higher the fees charged, the lower the profits generated for Myanmar itself.
The deals to build the pipelines were originally negotiated when Myanmar was under military rule. They were built during a 17-year period starting in 1997. Myanmar had little cash to build infrastructure. It invited foreign companies to provide the upfront capital investment in return for majority stakes.
It now appears the foreign owners have recouped all their investment, while the leaked documents show they are now raking in huge sums of cash.
The scale of profits will raise questions over whether the negotiators then working under the auspices of the country’s military rulers struck deals that were in the interest of the Myanmar people.
A large element of the dividends made from pipeline companies ended up in the hands of foreign gas production companies ultimately controlled by the governments of China, Thailand and Malaysia.
Japan and South Korea also have small, indirect investments in gas pipelines in Myanmar.
The pipelines appear to be operating on massive profit margins – to the cost of the Myanmar economy.
The leaked accounts show that the owners of the Taninthayi pipeline from the Yetagun gas field to Thailand made a 76 per cent profit before tax margin between 2017 and 2019.
MOGE owns only a minority stake in this pipleline – some 20 per cent – with the rest owned by Petronas, the Malaysian state-owned energy giant, Nippon Oil Exploration from Japan, and Thailand state-owned PTTEP.
These profit figures come from leaked records obtained by Distributed Denial of Secrets, a non-profit transparency collective.
Earlier this year, Justice for Myanmar working with UK-based journalism organisation, Finance Uncovered, revealed another pipeline run by Total’s which pipes Yadana gas made enormous pre-tax profits of US$1.23 billion in the three years to 2019 while costing just US$22.3 million to run.
The huge profits from piping gas made by Total means that Myanmar receives less revenue from its gas than it might have otherwise expected.
Below is a table detailing the three pipeline owners and the profits they made.
This is a Myanmar Now story in association with Finance Uncovered, a UK-based journalism organisation.
