Busi­ness

Can LNG fill Myan­mar’s power gap?

The Myanmar Times - Weekend - - Business - 8 SU PHYO WIN

su­phy­owin@mm­times.com

IN­SUF­FI­CIENT elec­tric­ity is one of the ma­jor prob­lems Myan­mar faces when it comes to at­tract­ing in­vest­ment. As the econ­omy ex­pands, de­mand for power is ris­ing rapidly. How­ever, the lack of it has im­peded the progress of many busi­nesses in the coun­try.

As such, the gov­ern­ment has iden­ti­fied elec­tric­ity as its top pri­or­ity. Un­der the Myan­mar Na­tional Elec­tri­fi­ca­tion Plan (NEP), it aims to achieve 100 per­cent elec­tri­fi­ca­tion by 2030. This will in­volve achiev­ing a to­tal of 24,000 MW of elec­tric­ity gen­er­at­ing ca­pac­ity, which, in turn, re­quires vast in­fra­struc­ture in­vest­ments in power sec­tor.

That’s be­cause the 24,000 MW tar­get is al­most five times the cur­rent ca­pac­ity in­stalled. In the mean­time, the need for elec­tric­ity is in­creas­ing by the day. This year, de­mand for elec­tric­ity dur­ing sum­mer hit a peak of 3,000 MW.

Can Myan­mar achieve its power gen­er­a­tion tar­get? Are its goals re­al­is­tic?

Al­though coal is rec­om­mended as one of the gen­er­a­tors of power for the coun­try, so far, no coal-fired projects have been ap­proved. Mean­while, nearly all the hy­dro-power projects in the coun­try have been de­layed ow­ing to so­cial and en­vi­ron­men­tal con­cerns.

LNG op­tion That leaves the gov­ern­ment with gas as the main source of power. Yet, pro­duc­tion at Myan­mar’s gas fields has also been de­clin­ing. To be sure, there have been sev­eral gas dis­cov­er­ies off the coast of south­ern Rakhine in re­cent years, but it will take ten years or more be­fore those fields are de­vel­oped and ready to pro­duce.

Some in­dus­try in­sid­ers have sug­gested us­ing liq­ue­fied nat­u­ral gas (LNG) to fill the gap. “We can buy LNG to power up the in­fra­struc­ture here and do this for ten years, and once do­mes­tic gas pro­duc­tion is up again, we can just stop buy­ing LNG and switch to the nat­u­ral gas that we have pro­duced,” said Ed­win Van­der­bruggen, Se­nior Part­ner of VDB Loi, dur­ing a panel dis­cus­sion at the 2017 Global In­vest­ment Fo­rum held in Nay Pyi Taw re­cently.

In fact, Myanma Oil and Gas En­ter­prise last year cre­ated an LNG busi­ness com­mit­tee to ex­plore in­ter­est in the im­por­ta­tion and re­gasi­fi­ca­tion of LNG.

The way Mr Van­der­bruggen tells it, ma­jor oil com­pa­nies like PTT, Shell, To­tal and many oth­ers have ini­ti­ated ne­go­ti­a­tions with the gov­ern­ment with re­gards to sev­eral LNG ten­ders. Yet, noth­ing has been an­nounced so far.

Speak­ing on the same panel, An­drew Lee, chief coun­try rep­re­sen­ta­tive of GE Myan­mar, said even LNG will take some time to kick-off. “When we talk about LNG and po­ten­tial dis­cov­er­ies of new gas, were talk­ing mid-to-long term.”

Over the short term, he be­lieves op­ti­mis­ing the ex­ist­ing power plants lo­cated near the ur­ban ar­eas to gen­er­ate gas is a more vi­able op­tion. “Yangon now con­sumes 2.1 giga watts of power. Next year, it will prob­a­bly be 3.1GW. There is more de­mand at the com­mer­cial ar­eas in Yangon,” he said.

Dur­ing the panel, Daw Mi Mi Khaing, Di­rec­tor Gen­eral, Depart­ment of Elec­tric Power Plan­ning, Min­istry of Elec­tric­ity and En­ergy said the min­istry needs to con­sider the in­creas­ing amount of the power needed across the whole coun­try. He said the min­istry has to think about a proper gen­er­a­tion mix and the least costly one to sup­ply the na­tional grid.

“There are two op­tions for LNG. The first is im­port­ing the LNG. The sec­ond op­tion is con­vert­ing gas to power. TO­TAL and other very rep­utable com­pa­nies sub­mit­ted a very fa­vor­able pack­age for the gas to power so­lu­tion, in­clud­ing the power trans­mis­sion line. It will be ben­e­fi­cial to im­prov­ing power gen­er­a­tion,” she said.

The dis­cus­sions come as losses from sub­si­dis­ing power tar­iffs by the gov­ern­ment rose to US$400 mil­lion dur­ing the 2016-17 fis­cal year, de­spite higher con­tri­bu­tions from the pri­vate sec­tor.

Ac­cord­ing to min­istry data, in the 2014-15 fis­cal year, state-owned power gen­er­a­tion was 65 per­cent and pri­vate sec­tor gen­er­ated 35pc. By 2016-17 that ra­tio was 50-50.

Con­tri­bu­tions by the pri­vate sec­tor are ex­pected to rise in the fu­ture. “As you know, the lower tar­iff rate for con­sumer can­not cover the over­all cost of gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion of power . But in or­der to achieve 100pc elec­tri­fi­ca­tion, over 10,000-15,000 of MW of en­ergy may be needed,” Daw Mi Mi Khaing said.

“The prob­lem is how to bal­ance be­tween power com­ing from the pri­vate sec­tor and gov­ern­ment in­vest­ment and how to limit the fi­nan­cial li­a­bil­ity in the whole sec­tor to avoid fur­ther gov­ern­ment losses.”

A tanker pass through the Pol­ish coast car­ry­ing LNG. Ex­perts sug­gest LNG can be used to fill Myan­mar’s power short­age. Photo: EPA

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