Government Subsidy of Electricity Bill Hindrance to Development of Sector


Ministers and industry experts say the government’s approach of paying the electricity bill using the union budget is a hindrance to the development of the sector.

In 2012, the average export rates per electric unit in Southeast Asian countries can cost up to more than K267 per electric unit: K67 in Brunei, K71 in Myanmar, K117 in Thailand, more than K105 in Laos, more than K119 in Vietnam, approximately K166 in Malaysia, K230 in Cambodia, and approximately K267 in Singapore. Myanmar has the second lowest electricity export rate in Southeast Asia.

Electricity sales currently cover maintenance and operation costs of hydroelectric power plants, excluding the costs of investment. This is based on a decision made by the government to cut huge losses.

“Government-owned hydroelectric stations are now selling electricity at K18 per unit. We are in trouble because of this. There will not be any profit … and we cannot reinvest. There will be no new hydroelectric power stations for the next five years,” said U Maw Thar Htwe, former deputy minister for electric power.

During the electrical power development forum held on March 3, delegates shared their input on the issues related to the government’s financial loss in funding electricity supply.

The average cost for generating one electric unit is K77.25. With distribution costs, the price will amount to K92 per unit. Thus, the government is losing roughly K23 per unit, according to Dr Tun Naing, deputy minister of the Ministry of Electricity and Energy.

“The price of electricity should be increased, but working class people should not be affected … The government is footing K24. We need to increase the bill so that the government only needs to foot about K20. It is important to change the price of electricity.

“If the government does not change the [electricity] price now, it will be impossible to change in the next two or three years,” said U Kyaw Kyaw Hlaing, chair and CEO of Smart Technical Services.

As the government is covering the cost for the electric bill, fewer funds are available for the development of generation, transmission and distribution sectors.

Dr Tun Naing said that the government is using the union budget to buy electricity but they lose K23 for every unit sold. He also added that the revenues set aside for the country’s development are now depleted in order to satisfy consumers. For the fiscal year 2017-18, the government is estimated to run a loss of K378 billions in the electricity sector.

“If the government keeps on covering … for 35pc of the population, and fails to invest in other power projects, it will be a hindrance to supply electricity to the rest of the population. Business owners are taking advantage of the lower bills and gaining profit,” he added.

Consumers living in remote areas outside of the grid system need to pay higher rates for electricity and tariffs, because their financial contributions actually subsidise electric bills for those located within the grid system. The electrical power distribution system favoured by the public can only be implemented if the government can cut losses by increasing revenue, Dr Tun Naing said.

“As the government is using the union budget, there are no funds for the sector’s development. It will hamper the development of the electricity sector. Citizens would need to step up and pay their dues,” he added. However, 35pc of the population with access to electricity have no interest in saving energy due to low electricity bill rates, while the other 65pc of the population are still waiting for access to power.


Source: Myanmar Times

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