Govt can renegotiate gas-export contracts, Parami CEO says

Myanmar should renegotiate its gas-export contracts with neighbouring countries to solve its energy crisis, Parami Energy Group chief executive officer Pyae Wa Tun said, suggesting that about half of the natural gas being exported should remain in Myanmar.

Renegotiating the contracts would free Myanmar from the need to pursue environmentally risky large-scale hydropower projects and coal-fired power plants to meet its energy needs, he said.

Pyae Wa Tun said Myanmar’s domestic supply of natural gas was 350-400 million cubic feet per day (mmcfd), while its exports were 1-1.5 billion cubic feet per day to neighbouring countries.

“We should ask for 500 mmcfd of the gas being exported to them,” he added. “The government should negotiate with neighbouring countries [gas is exported to] at a time when the country is facing energy crisis. We have the right to do so,” Pyae Wa Tun said.

The CEO described the construction of coal-fired power plants as an “odd” option, considering that Myanmar has four major rivers for hydropower projects and is exporting gas. “It is odd that they want to build coal-fired power plants even though the country has such natural resources,” he said.

Pyae Wa Tun outlined a strategy for renegotiating the contracts. First, Myanmar had a right to renegotiate the contracts – which were signed under the previous junta – because it is facing an energy crisis, he said. However, before the talks with neighbouring countries are started two ministries – the Ministry of Electric Power and the Ministry of Energy – should hold talks to reach a common front. He described these inter-ministerial talks as “crucial”. After they have been concluded President Thein Sein will assume responsibility for the negotiations with neighbouring countries, he said.

The energy-crisis solution outlined by Parami’s CEO follow a controversial announcement in September by the Ministry of Electric Power, granting permission to Myanmar conglomerate IGE Company and China Three Gorges Corporation to construct Southeast Asia’s largest dam on the Thanlwin River in Shan State. The dam – also known as the Upstream Thanlwin (Mongton) hydropower project – will purportedly have a capacity to generate 7,000 megawatts, or 34,717 kilowatt-hours, of power a year. Such large-scale hydropower projects, however, have immense environmental and social impacts, including relocation of thousands of families, critics of the project have warned.

While Myanmar will have to cope with the environmental and social impacts of the project – which include threatening the nascent peace process with armed ethnic groups – the energy generated by this dam is likely to be exported to China, critics have said.

Jiraporn Sirikum, assistant director of the ministry’s system planning division, said “it would be better if Myanmar exports its hydropower to other countries”.

“The reason is that interest rate is low on the loans for the [hydro] projects, so it needs to export hydropower,” the assistant director said at the Myanmar Electric Power Convention in Yangon on October 22.

Parami’s Pyae Wa Tun called for a “cleaner and sustainable process” for generating power, as well as one that “brings many benefits to the country”.

“What we need is not money. Our aim is to ensure 70 per cent of population has easy access to electricity and that we see a massive inflow of foreign direct investment [FDI],” he said. The lack of access to power has been identified as a key deterrent to FDI in Myanmar, with many factories in economic zones relying on diesel-powered generators to operate.

Pyae Wa Tun also said large-scale hydropower projects were not the best option for harnessing the energy potential offered by Myanmar’s rivers. “As all we know the IFC [International Finance Corporation] and the World Bank will not provide any assistance to us to implement large-scale hydropower projects. So, we need to consider whether to build big hydropower projects or 100 small hydropower projects,” he said.

The views expressed by the CEO are in alignment with other energy exports who have urged the government to avoid coal-fired power plants – which would rely on imported coal – and rely on its abundant supply of natural gas and the potential power generation offered by its four major rivers. They have also called for small-scale hydropower projects, rather than the massive ones currently being planned.


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