06/14/2012 11:03 GMT

TOKYO, June 14, 2012 (AFP) - Japan agreed on Thursday to provide up to 1.6 billion yen ($20 million) in emergency grant aid to help Myanmar tackle its chronic power shortages, news reports said.

The agreement came after Htay Oo, general secretary of Myanmar's army-backed ruling Union Solidarity and Development Party (USDP), met Japanese Foreign Minister Koichiro Gemba in Tokyo.

Htay Oo also met Prime Minister Yoshihiko Noda later in the day.

Japan's aid is to be used for buying 16 diesel generators and fuel to help Myanmar deal with insufficient electricity supplies, Kyodo News reported.

Myanmar, which depends on hydro power for about 70 percent of its electricity, has been carrying out a range of reforms and national reconciliation following the end of decades of outright military rule last year.

The country is preparing for an economic resurgence and is attracting attention from firms all over the world seeking a piece of the potentially lucrative market.

Tokyo has already announced plans to forgive about $3.7 billion of Myanmar's debt and resume suspended aid as Japanese firms continue a push into the country, formerly known as Burma.

Myanmar has largely untapped natural resources, including minerals, metals and fossil fuels, and a potentially huge tourism sector, although challenges abound with the rule of law weakly enforced and a major infrastructure deficit.

si/mtp