Myan­mar’s En­ergy Sec­tor is set to Power Away. The aim is to light up the whole coun­try by 2030 at the lat­est.

Myan­mar’s gov­ern­ment has pri­ori­tised en­er­gis­ing the coun­try’s power sec­tor. The aim is to pro­vide elec­tric­ity to the whole coun­try by 2030 at the lat­est.

Norway-Asia Business Review - - Contents - LARRY JAGAN

While hy­dro­elec­tric schemes will pro­vide most of the coun­try’s power needs, new gas-pow­ered plants and LNG de­pots will boost the power sup­ply in the medium term. As in­ter­na­tional fi­nance and ex­per­tise is be­ing sought, there will be plenty of busi­ness op­por­tu­ni­ties for for­eign firms.

Myan­mar’s gov­ern­ment has launched a con­certed ef­fort to meet the coun­try’s grow­ing power needs. Daw Aung San Suu Kyi has re­alised that the peace process alone can­not en­sure sta­bil­ity and na­tional rec­on­cil­i­a­tion, ac­cord­ing to gov­ern­ment in­sid­ers.

“Peace and elec­tri­fi­ca­tion,” she an­nounced two months ago. When she vis­ited vil­lagers near Man­dalay, she told them the whole coun­try would have elec­tric­ity by 2030. While it is an am­bi­tious prophecy, it is one that the gov­ern­ment is firmly com­mit­ted to achiev­ing, se­nior gov­ern­ment of­fi­cials told Busi­ness Re­view.

In­vest­ment in in­fra­struc­ture de­vel­op­ment is “ground zero for democ­racy in Myan­mar,” a se­nior eco­nomic ad­vi­sor to the gov­ern­ment, Mr Sean Tur­nell told the Busi­ness Re­view re­cently. It is cen­tral to the gov­ern­ment’s cur­rent plans for eco­nomic de­vel­op­ment, he added.

The re­cent ap­point­ment of U Win Khaing as min­is­ter for en­ergy is a sig­nif­i­cant step, ac­cord­ing to gov­ern­ment in­sid­ers. While Aung San Suu Kyi did not know him per­son­ally be­fore his orig­i­nal ap­point­ment as con­struc­tion min­is­ter, she has been im­pressed enor­mously by his pro­fes­sion­al­ism and his man­age­ment skills. He has been in­structed to de­liver on the gov­ern­ment’s re­cent prom­ise to pro­vide elec­tri­fi­ca­tion to the whole coun­try.

The promi­nence the gov­ern­ment has put on power gen­er­a­tion has also been sym­bol­i­cally sig­nalled on the front pages of the gov­ern­ment me­dia over the last few months – with U Win Khaing lead­ing gov­ern­ment del­e­ga­tions to in­spect the coun­try’s hy­dropower plants.

The coun­try’s of­fi­cial busi­ness or­ga­ni­za­tion – the Union of Myan­mar Fed­er­a­tion of Cham­bers of Com­merce and In­dus­try -- has ap­pointed an en­ergy work­ing com­mit­tee to help for­mu­late pol­icy, at the gov­ern­ment’s be­hest: the two Vice Pres­i­dents, es­pe­cially Myint Swe are heav­ily in­volved.

No ob­sta­cle will be al­lowed to stand in the way of pro­vid­ing elec­tri­fi­ca­tion to the whole coun­try by 2020, the new en­ergy min­is­ter told busi­ness­men in­volved in the power in­dus­try, shortly af­ter his ap­point­ment. The fi­nance min­is­ter U Kyaw Win told the en­ergy min­is­ter in a pri­vate meet­ing in early Au­gust that the gov­ern­ment would pro­vide all the nec­es­sary fi­nance to boost en­ergy gen­er­a­tion im­me­di­ately, ac­cord­ing to a se­nior gov­ern­ment of­fi­cial who was present on con­di­tion of anonymity. A list of projects and their cost was all that was needed to re­lease the funds, the en­ergy min­is­ter was told.

The over­all aim is to con­vince in­ter­na­tional busi­nesses and in­vestors that the Myan­mar en­ergy sec­tor is “in­vestable”, said Mr Tur­nell. The gov­ern­ment, he added, un­der­stands they need in­ter­na­tional in­vest­ment and ex­per­tise to de­liver on their prom­ises. The gov­ern­ment has al­ready reached out to Nor­way, China and Thai­land for as­sis­tance, ac­cord­ing to gov­ern­ment in­sid­ers.

The gov­ern­ment has ruled out coal-gen­er­ated power plants, in favour of other op­tions, es­pe­cially re­new­able en­ergy, ac­cord­ing to sources in the min­istry of en­ergy. In the short-run, quickly in­creas­ing the power on the grid will be left to Liq­uid Nat­u­ral Gas ( LNG), and there are ma­jor but ten­ta­tive plans to build a LNG stor­age and sup­ply base near Yan­gon – fu­elled ini­tially from Thai­land and Sin­ga­pore, with lo­cal gas com­ing on­line as soon as pos­si­ble. The longer-term plan is to pro­vide the coun­try’s en­ergy needs with hy­dro­elec­tric power, though this is likely to take up to ten years be­fore the scheme is pro­duc­tive. So­lar en­ergy is also go­ing to be added to the mix.

Myan­mar is in des­per­ate need of a sta­ble sup­ply of elec­tric­ity, par­tic­u­larly in the ru­ral ar­eas, where some 70% of the pop­u­la­tion lives. This lack of a con­sis­tent power sup­ply is preventing the coun­try’s eco­nomic take-off and lim­it­ing in­dus­trial growth. “Myan­mar’s abil­ity to raise per capita in­comes and liv­ing stan­dards, and to cre­ate a more in­clu­sive and eq­ui­table so­ci­ety, all de­pends on a well-func­tion­ing power sec­tor,” said Keith Rabin a New York-based busi­ness con­sul­tant and en­ergy spe­cial­ist with long ex­pe­ri­ence in Myan­mar.

In 1986 Thai­land’s power grid cov­ered only 11% of the pop­u­la­tion, but af­ter the gov­ern­ment’s con­certed elec­tri­fi­ca­tion pro­gramme, es­pe­cially in the ru­ral ar­eas, this jumped to around 65%. As a re­sult of the sup­ply of cheap elec­tric­ity, Thai­land was able to be­come a re­gional man­u­fac­tur­ing hub.

In Myan­mar, only 30% of the coun­try’s pop­u­la­tion is cur­rently con­nected to the na­tional power grid. Myan­mar’s re­cent cen­sus found that 69% of the coun­try’s house­holds use fire­wood for cook­ing and 46% use kerosene, can­dles or bat­ter­ies for light­ing. This poses both health risks and eats up

much of their daily in­come. Ac­cord­ing to re­cent re­ports, this re­liance on non-grid power costs ru­ral res­i­dents 10 to 20 times that supplied by gov­ern­ment from the sub­si­dized grid.

Myan­mar’s cur­rent power gen­er­a­tion ca­pac­ity is only about one­tenth of their neigh­bours, Thai­land. Myan­mar cur­rently pro­duces a 5,215 Megawatts of power an­nu­ally on the na­tional grid: of which hy­dropower ac­counts for 61%. But it also loses more than 20 per­cent of what it gen­er­ates dur­ing trans­mis­sion and dis­tri­bu­tion. The coun­try’s elec­tric­ity con­sump­tion is 44% for res­i­den­tial use, 32% for in­dus­trial pur­poses and 20% for com­mer­cial use.

But Myan­mar’s power needs are in­creas­ingly acute – es­pe­cially in the coun­try’s ur­ban cen­tres. There is a con­tin­ued rapid growth in de­mand for elec­tric­ity, es­ti­mated at around 12% an­nu­ally. The sit­u­a­tion in Yan­gon is par­tic­u­larly ur­gent, where the to­tal en­ergy us­age in the city cen­tre has risen some 20% since 2015 -- an es­ti­mated 1,250 Megawatt.

The sit­u­a­tion is so dire that for­eign firms in the joint Ja­pan-Myan­mar run Thiliwa Spe­cial Eco­nomic Zone, on the out­skirts of Yan­gon, have had to re­strict their im­me­di­ate ex­pan­sion plans. Aji­nomoto -- the Ja­panese mega food and chem­i­cal com­pany, which pro­duces amongst other things, sea­son­ing, cook­ing oils, sweet­en­ers and phar­ma­ceu­ti­cals -opened its fac­tory in Thi­lawa last month, but has had to de­lay its pro­duc­tion plans be­cause of the lack of elec­tric­ity. In­stead, the com­pany im­ports man­u­fac­tured sea­son­ing pow­der in bulk from its fac­tory in Thai­land, packs it in Thi­lawa, and then dis­trib­utes it.

Other com­pa­nies that had also hoped to start pro­duc­tion – in­clud­ing Yan­mar Myan­mar, a joint ven­ture be­tween the Ja­pan-based Yan­mar and Mit­sui, im­port­ing and sell­ing agri­cul­tural and farm­ing ma­chin­ery – who set up in Thi­lawa ear­lier this year have shelved their pro­duc­tion plans un­til there is a re­li­able source of power.

“Elec­tric­ity is one of the main dif­fi­cul­ties fac­ing fac­to­ries in Thiliwa,” said Takashi Yanai, for­mer pres­i­dent of the Myan­mar- Ja­pan Thi­lawa De­vel­op­ment Ltd (MJTD). “We need to re­solve the is­sue of the power sup­ply in the SEZ be­fore the man­u­fac­tur­ing sec­tor can de­velop ro­bustly. But we hope the sit­u­a­tion will im­prove as the gov­ern­ment is pro­vid­ing sup­port.”

A re­cent re­port, “Myan­mar En­ergy” – writ­ten by Alexan­der Dodge of the Nor­we­gian Univer­sity of Science and Tech­nol­ogy and com­mis­sioned by the Nor­we­gian Em­bassy in Yan­gon -sug­gests a LNG so­lu­tion: “short term, medium-sized LNG so­lu­tions are less cap­i­tal in­ten­sive and more suit­able to the given fis­cal and reg­u­la­tory frame­work,” ad­vised the re­port. 250 Megawatt LNG­fu­eled power barges could also be lo­cated fur­ther up the Yan­gon River and be con­nected to the ex­ist­ing trans­mis­sion grid, added the re­port.

The min­is­ter, U Win Khaing, told busi­ness­men in Naypyi­daw shortly af­ter his ap­point­ment, that he favoured LNG as a short-term so­lu­tion. The gov­ern­ment has since an­nounced that three new nat­u­ral gas-fired power plants were ex­pected to go live be­fore next sum­mer, when the coun­try is ex­pected to face acute power short­ages, es­pe­cially in Yan­gon.

“We plan to run three new gas­fired power plants that can gen­er­ate 450 Megawatt of power by next sum­mer. This will meet the coun­try’s de­mands, par­tic­u­lar those from Yan­gon, in 2018,” U Khin Maung Lay, deputy man­ag­ing di­rec­tor of the Min­istry of Elec­tric­ity and En­ergy’s ( MOEE) Elec­tric Power Gen­er­a­tion En­ter­prise, told a press con­fer­ence in Yan­gon in Septem­ber.

The power plants are Thadon in Mon State, Thaketa in the Yan­gon Re­gion and My­ingyan in Man­dalay. The State-owned Tha­ton power plant, cur­rently be­ing built by China En­ergy En­gi­neer­ing Group Co, is about 80% com­plete and ex­pected to gen­er­ate 120 Megawatt of power.

The Thaketa power plant, is a joint ven­ture be­tween China’s Union Re­sources and En­gi­neer­ing and the MOEE, and is more than three quar­ters com­plete. “When the plant is op­er­a­tional, it is ex­pected to gen­er­ate 106 Megawatt of power,” said U Aung Kyaw Oo, a mem­ber of the Yan­gon Elec­tric­ity Sup­ply Cor­po­ra­tion. “It will sup­port most of Yan­gon’s elec­tric­ity de­mand,” he added.

Con­struc­tion of the third and largest plant -- the 225 Megawatt My­ingyan plant -- is around 90% com­plete. It is ex­pected to pro­vide a long-term power so­lu­tion for the Man­dalay Re­gion. It is be­ing con­structed by Sin­ga­pore’s Sem­b­corp In­dus­tries, un­der a build-op­er­ate-trans­fer agree­ment with the MOEE.

Two years ago the World Bank ap­proved a USD 400 mil­lion loan to sup­port the coun­try’s Na­tional Elec­tri­fi­ca­tion Plan: the first phase of which seeks to ex­tend elec­tric­ity ac­cess to over a mil­lion house­holds by 2021; 60% of which will be con­nected to the na­tional grid. In or­der to reach full elec­tri­fi­ca­tion by 2030, the World Bank es­ti­mates that over 517,000 con­nec­tions need to be made ev­ery year.

The Gov­ern­ment of Myan­mar, with the help of the World Bank, is also cur­rently rolling out off-grid elec­tric­ity ser­vices as part its Na­tional Elec­tri­fi­ca­tion Plan, in­stalling so­lar PV sys­tems in eight of Myan­mar’s states and re­gions, ben­e­fit­ing more than 2,000 vil­lages and 140,000 house­holds.

The aim is to pro­vide over 2 mil­lion peo­ple with off-grid elec­tri­fi­ca­tion by 2021.

But the gov­ern­ment has a long way to go to achieve its goal of com­plete elec­tri­fi­ca­tion of the coun­try by 2020 as the min­is­ter hopes, or even 2030 as Aug San Suu Kyi has promised and the World Bank projects. The LNG projects are a good start – and tes­tify to the gov­ern­ment’s com­mit­ment. But it is hy­dro­elec­tric­ity that is likely to be the longer-term so­lu­tion. Build­ing hy­dro­elec­tric plants is a long process – in­volv­ing nec­es­sary ten­ders, fea­si­bil­ity stud­ies, en­vi­ron­men­tal and com­mu­nity im­pact stud­ies.

As the con­tro­ver­sial Chi­ne­se­backed My­it­sone Dam project, is ex­pected to be for­mally can­celled soon, prob­a­bly dur­ing the Chi­nese pres­i­dent, Xi Jin­ping’s state visit to Myan­mar in Novem­ber, many of these po­ten­tial hy­dro schemes will have to start from scratch. What is des­per­ately needed is in­ter­na­tional ex­per­tise and in­vest­ment. The in­dus­try min­is­ter, U Khin Maung Cho, told a busi­ness fo­rum in Bangkok in Au­gust that power short­ages will soon be a thin of the past as the gov­ern­ment in­tended to turn to Nor­way for as­sis­tance in pro­vid­ing hy­dro­elec­tric power.

The gov­ern­ment has started to ad­dress the coun­try’s power needs in earnest. So there is likely to be enor­mous op­por­tu­ni­ties for for­eign en­ergy com­pa­nies to be in­volved, both in the short-term LNG so­lu­tions and the longer-term hy­dro­elec­tric schemes.


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