Electricity problems persist despite progress

Despite increased investment in Myanmar’s electricity sector in 2013, including by international financial institutions, sustainable development remains a challenge. Only 26 percent of the population has access to government electricity supplies, government figures say, while in the past year new projects to increase production and a proposal of price hikes to reduce consumption and bring sustainability brought controversy at every stage.

The nation’s energy woes were outlined in its first-ever comprehensive energy report, released in June at the World Economic Forum. At the forum, which was being held in Myanmar for the first time, a broad range of topics were discussed by national and international industry leaders, businesspeople and government officials – including the country’s present and future energy needs.

According to New Energy Architecture: Myanmar, even with electricity production doubling annually it would take five years to meet today’s level of demand. In that time, the report noted,demand would continue to grow by 12pc every year.

International energy experts recommend the country prioritise natural gas-fired power plants to support urgent electricity demand, and the Ministry of Electric Power signed agreements with foreign companies for six gas-fired power plant projects in early 2013.

Some foreign firms have also been given permission to run feasibility studies to consider the effects of rejuvenating ten ageing gas-fired power plants to improve electricity production.

As the report makes clear, however, natural gas alone can’t supply the whole answer to the country’s energy problems. Current offshore gas fields are already engaged for long-term exports to China and Thailand, while new discoveries will take several years to reach production stage.

Currently, only a small portion of natural gas is supplied to domestic use. The country needs 700 million cubic feet (mcf) of natural gas daily but only 300mcf is supported, according the energy report.

Local and foreign private companies have invested US$270 million developing four privately run gas-fired power plants in the Yangon area. While the plants are ready to produce electricity, production has been delayed as the power purchasing agreement (PPA) is yet to be completed between the Ministry of Electric Power and the companies involved.

“The private companies are expecting to sell electricity at K120 per unit once the PPA is signed,” said U Zaya Thura Mon, CEO of Myanmar Central Power Company.

The hold-up in production is due to delays in drafting a new electricity law, which will regulate private electricity production and distribution. That law is being written by the electricity ministry with the help of the World Bank and the Asian Development Bank, though both international finance institutions have since left the process for unknown reasons.

Several major hydropower projects got underway in 2013, with the government announcing early in the year that dams will be built on the Salween River. Projects in Shan State are at Kwanlon, with an install capacity of 1400 megawatts; Naungpha, with 1000MW; Manntaung, with 200MW; and Mainton, with 7110MW capacity. Kayah State’s Ywarthit will produce 4000 MW, while Hatkyiin Kayin State will produce 1360MW.

As with the controversial Myitsone dam project – put on hold in 2011 by President U Thein Sein (to be debated again after the end of his government’s term in 2015) – opposition to the Salween River projects has been fierce. Residents and civil societies have called for the projects to be halted, voicing concerns over social and environmental issues.

Another criticism of the Salween projects is that – as with the shelved Myitsone dam – the government plans to sell the electricity to other nations, in spite of a major energy deficit at home.

The electricity ministry has signed agreements hydropower dams with five Chinese companies, one Thai company and three local firms.

Four hydro-power projects have been halted around the country, and coal-fired power plant projects are also being condemned by the public, Minister of Electric Power U Khin Maung Soe said in September.

On November 13 he announced that 2014’s hot season will see electricity demands in areas where electricity is already provided rise to 2370MW – 715MW above the current maximum electricity production level of 1655MW.

“The ministry is trying to increase [production levels] 202MW with hydro power plants which are still under construction and 259.1MW from gas-fired power plants,” U Khin Maung Soe said.

But with electricity shortages still expected in the medium term, the government announced at the end of October that they would raise prices 43pc for certain household consumers, but delayed the hike until April after backlash from the public and parliament.

While the public argued against the rate hike, some experts said increases would be needed for financial sustainability, as the power supply is costing the government K185 billion (about US$190 million) a year.

“The government would require a greater amount of tariffs or subsidies in order to ensure the financial viability of the power sector,” Kim Jong Inn, an energy specialist with Asian Development Bank (ADB), said in November.

In September the World Bank announced a US$140 million loan to Myanmar’s electricity sector. The loan will help rebuild an old gas-fired power plant in Mon State. In early December ADB announced a $60 million loan to update electricity transmission infrastructure in Yangon, Mandalay, Sagaing and Magwe regions.

Of 396 cities in Myanmar, 224 cities, or 57pc, have access to electricity. Of the country’s 60,000 villages, less than 20,000 – or one-third – have electricity. In total, according to the Ministry of Electric Power, only around 26pc of the population of Myanmar have access to electricity.

Source: Myanmar Times

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