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P Manoj
Adani Ports and Special Economic Zone Ltd (APSEZ) has applied for a general licence from the Office of Foreign Assets Control (OFAC) of the US Department of Treasury to run the container terminal it is constructing in Myanmar. This comes in the wake of developments following the military coup in Myanmar on February 1.
“The company has applied to the Office of Foreign Assets Control (OFAC) of the US Department of Treasury Operations for a general licence to operate the port as it is expected to create stable jobs, promote private commercial trade, facilitate the arrival of goods such as food, medicine and clothing for the Burmese people,” said APSEZ while announcing its April-June quarterly results on Tuesday.
US sanctions
The project has come under a cloud with the US imposing sanctions on 10 serving and former Burmese military officials responsible for the February 1 coup as well as on Burma’s military holding companies – Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC). In May 2019, Adani Yangon International Terminal Company Limited (AYITCL), a 100 per cent subsidiary of Adani International Terminal Pte Ltd (AITPL), signed a Build Operate and Transfer (BOT) contract for 50 years to construct a $290-million container terminal in Yangon on land leased from Myanmar Economic Corporation Limited (MEC).
As per the agreement, APSEZ was to pay $90 million for land lease premium and $20,000 as an annual lease charge. “All negotiations and payments to MEC were made in advance of the imposition of sanctions on MEC by the US. APSEZ’s last such payment to MEC was made in August 2020, six months prior to the imposition of sanctions,” it said.
APSEZ has invested $127 million on the project till March 2021. APSEZ had previously said it is proactively drawing on the opinion of OFAC and other stakeholders, and will factor in their concerns in dealing with the evolving situation.
“For us, not engaging with a sanctioned entity in any form, and zero tolerance of human rights violation is non-negotiable,” said the firm in its latest annual report.
“In a scenario where Myanmar is classified as a sanctioned country under OFAC and if stakeholders are uncomfortable or if stakeholders believe that continuance represents a violation of sanctions, APSEZ will abandon the project and write down project investments in full,” it said in the annual report.
“The write-down will not materially impact the balance sheet as it is equivalent to about 1.3 per cent of the total assets of APSEZ,” it added.
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