US sanctions on Burma’s military holding firms put more stress on Adani’s under construction box terminal

The United States on Thursday imposed sanctions on Burma’s military holding companies – Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC) – a development that has a direct bearing on a container terminal the Adani Group is building along the Yangon river.

The Burmese military controls significant segments of the country’s economy through these holding firms.

The sanctions imposed Thursday specifically target the economic resources of Burma’s military regime, which is responsible for the overthrow of Burma’s democratically elected government (on February 1) and the ongoing repression of the Burmese people, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) said while announcing the sanctions.

MEC is led by Sr Gen Min Aung Hlaing, who was sanctioned by the US on February 11 along with nine other serving and former Burmese military officials for their role in leading the February 1 coup.

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.

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 will be built under the Myanmar Port Authority’s auspices and the Myanmar Ministry of Transport and Communication.

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

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 Ltd (MEC), currently operating AIPT 1.

ITD Cementation India Ltd is undertaking the EPC work for the project.

APSEZ had removed reference to the Myanmar container terminal from all its official press statements after February 9, when it announced the third-quarter results.

The first phase of the new terminal was expected to start operations by the end of 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.

“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 in February.

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