Adani Group in a bind over Myanmar military coup and US sanctions

The military coup against the democratically elected civilian government of Myanmar and the sanctions imposed by the United States on ten serving and former Burmese military officials on Thursday have put the Adani Group, building a container terminal along Yangon river, in a bind.

The US Department of Treasury has imposed sanctions on ten current and former military officials responsible for the February 1 coup or associated with the Burmese military regime.

The sanctioned individuals include four former military officials appointed as members of the State Administration Council by the Burmese military, including Admiral Tin Aung San appointed as Minister for Transport and Communications.

“We are watching the situation in Myanmar carefully and will engage with the relevant authorities and stakeholders to seek their advice before deciding how to manage this project into the future,” a spokesperson for Adani Ports and Special Economic Zone Ltd (APSEZ) said.

Investment details

In May 2019, Adani Group said it would invest as much as $290 million to build and run a new container terminal along Myanmar’s Yangon river on a 50-year deal, its second overseas venture after the Abbot Point terminal in Queensland, Australia.

Adani’s investment in Myanmar gives India a geo-political counter to Chinese investments in Sri Lanka’s Hambantota and Colombo ports and Pakistan’s Gwadar port as Beijing encircles the region with its Belt and Road initiative (BRI).

The Yangon terminal is being built under the Myanmar Port Authority’s auspices and the Myanmar Ministry of Transport and Communication.

The project is helmed by Adani Yangon International Terminal Co Ltd (Adani), a unit of Adani Ports and Special Economic Zone Ltd (APSEZ).

The Ahlone International Port Terminal 2 (AIPT 2) will be developed over 54 acres of land leased from the Myanmar Economic Corporation Co Ltd (MEC), which is currently operating AIPT 1.

The first phase of the new terminal was expected to start operations by end 2020 with a capacity to handle 150,000 twenty-foot equivalent units (TEUs) but has been delayed.

In the second phase, the capacity of the terminal will be raised to 800,000 TEUs by June 2021.

As part of the deal, Adani will build a maritime university to upgrade skills of the local people and build local infrastructure such as waterways and other transport facilities to bring efficiencies and drive economic development in the region.

The AIPT 2 will be part of the Yangon Port Cluster, which currently includes Asia World Port Terminal and Myanmar Industrial Port. Along with Myanmar International Terminals Thilawa, to the south of Yangon, the Yangon cluster handle 90 per cent of Myanmar’s exports and imports.

The expansion of Myanmar’s river ports is part of that country’s strategy to rapidly increase exports over the next five years and position itself as a regional trade hub.

MEC, one of Myanmar’s biggest corporations, is controlled by its military’s Directorate of Defence Procurement.

The MEC mobilise revenue for the Myanmar military, known as the Tatmadaw.