Businesses want momentum in energy sector sustained beyond Myanmar elections

Myanmar needs to continue pushing out power tenders and policies to develop and reform its energy sector beyond the November elections, according to keynote speakers at a Yangon corporate briefing.

Speakers at a panel discussion about the Myanmar energy sector acknowledged the reforms rolled out over the last 12 months intended to attract private investments and scale up power generation, but said the authorities had to keep the momentum going beyond the election.

The panel discussion was organised by the Myanmar-Hong Kong Chamber of Commerce and Industry on August 28. The Myanmar Times talked to speakers on the sidelines.

The speakers agreed the recent “flurry of activities” in the oil and gas sector, although initiated at the last minute, represented a welcome rush to catch up with growing power demand and raise electricity tariffs in Myanmar.

The National League for Democracy-led government raised state-subsidised electricity tariffs a year ago and then rushed through five emergency power tenders, all won by Chinese firms. Also last year MPRL E&P Co, Woodside Energy of Australia and France’s Total signed a production agreement to develop an offshore gas field.

This year, despite COVID-19, the Ministry of Electricity and Energy raced through a much-criticised solar farm tender, also dominated by Chinese bidders.

The government is now drafting a petroleum law, which was recently submitted at the Amyotha Hluttaw, and intends to launch a new bidding round for natural gas exploration soon.

Yoma Micro Power CEO Alakesh Chetia called the initiatives “steps in the right direction” but said the government needed to go on delivering these actions next year to secure effective results.

“I hope they are not just politically-driven election-year initiatives but they are fundamental changes in the thought process of the government and the bureaucracy,” he told this newspaper.

Mr Chetia argued that decentralisation of power generation activities in Myanmar is important moving forward. “A lot of developed countries are already moving towards decentralisation, which is made possible by solar, wind and other renewable energy options,” he said.

Currently, power generation is centralised and once transmitted into the national grid is transported over long distances, resulting in losses of up to 25 percent before the electricity reaches the consumer.

Meanwhile, demand continues to grow. By 2025 demand could be as high as 8.6 gigawatts (GW), more than double current generation capacity. In comparison, Myanmar’s electrification rate has grown to 50pc from 34pc over the last five years.

Mr Chetia suggested that the authorities should take criticism from the industry into consideration for future plans.

The recent 1GW solar plant tender encompassing 30 sites across the country, for example, triggered backlash from the business community and western governments who complained about the hasty deadline and tough tender conditions implemented on top of COVID-19 travel restrictions.

“To avoid controversies, it is important to offer a level playing field. We see participants from one particular country were able to far outnumber all the others combined,” he said, referring to a Myanmar Times report that Chinese companies accounted for more than half the bids submitted.

U Kyaw Kyaw Hlaing (left) and Jeremy Mullins (centre) speak at the panel discussion “Is Myanmar’s energy revolution happening?” organised by the MyanmarHong Kong Chamber of Commerce and Industry in Yangon. Photo: Supplied

Another speaker, U Kyaw Kyaw Hlaing, chair of Smart Group of Companies, said technical obstacles made it difficult for Myanmar firms to take part in the solar tender.

For example, bidders are required to have already completed three solar projects, but Myanmar has only seen one materialised solar project in Minbu of Magwe Region to date.

U Kyaw Kyaw Hlaing also doubted that a new round of bidding for offshore oil and gas could happen before the second half of 2021. The petroleum law the government wants to pass before launching the bidding needs time to get through parliament, he explained. The plunge in global oil prices would also weigh on any oil and gas investments and now is not a good time to attract investors.

He also said the electricity tariff hike last year was not sufficient and urged the authorities to “be innovative”, suggesting adjusting the rate against demand depending on the time of day and seasons, and charging a higher rate for Yangon consumers.

But Jeremy Mullins, country director of Vriens & Partners, saw the tariff hike as a positive and critical move needed to unleash the potential of the economy.

“The Myanmar government was spending a lot of money on subsidising electricity prices for people, and often it went to richer people rather than people who didn’t
have electricity,” he commented, adding that the new rate is still relatively low in Southeast Asia.

The Yangon-based consultant added though, that consumers, some of whom saw their electricity bills double or triple, are now expecting more stable and better power supply moving forward.

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Source : Myanmar Times

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