Efforts under way to provide universal electricity access in Myanmar

Text size +-
Share

Myanmar’s recently unveiled economic agenda is heavily dependent on overcoming electricity shortages in areas already on the national grid as well as achieving the country’s goal of implementing universal access to electricity by 2030.

New economic plan

The 12-point national economic policy issued by the recently elected National League for Democracy (NLD) in late July calls for improving infrastructure, developing the manufacturing and agriculture industries, promoting export industries, and expanding the private sector through support for small and medium-sized enterprises.

To achieve these goals, significant improvements will be needed to the electricity generation, transmission and distribution systems.

While details on developments such as improving electricity service delivery were not included in the policy paper, earlier this month State Counsellor Daw Aung San Suu Kyi said a separate policy on expanding basic infrastructure would be released soon.

In particular, the policy will need to determine if the government will follow earlier proposals to increase the use of coal in maintaining the current energy mix, which is heavily weighted towards hydro-generation capacity, or to lift the input of renewables and gas.

Widening supply gap

Peak consumption in the high summer season was at 2730 MW, though the combined generational capacity of Myanmar’s power plants is just 2450 MW, leaving a significant shortfall in supply.

The supply gap is widened further as the present installed capacity does not take into account units taken off-line for maintenance or disruptions to service.

More than half of all electricity demand comes from Yangon, with commercial, industrial and private consumption there far higher than elsewhere in the country.

With demand rising by 300 MW annually, according to Ministry of Energy estimates, stepping up its investment programme will be crucial if Myanmar is to keep ahead of increasing demands on its grid.

Going national

Those future demands will include powering every business and household in Myanmar.

Currently, only about 3.7m households – or about 34% of all residences – have access to electricity, one of the lowest rates of electrification in the world. The World Bank estimates that at least 7.2m new connections for residential and business users are required to achieve universal access.

The previous administration announced ambitious targets to achieve access to electricity for 50% of the population by 2020, rising to 75% by 2025 and 100% by 2030, either through connection to the national grid or via dedicated off-grid sources powered by solar or through mini-grids.

Government estimates issued in February put the total investment required to end the existing electricity deficit and to meet future private and commercial demand at between $30bn and $40bn over the next 15 to 20 years.

State targets, private investment

According to World Bank projections, Myanmar will not be able to fund the expansion of its generation and distribution network through state investments alone.

“There has been a lot of emphasis placed on independent power producers as a means to solve Myanmar’s immediate power problems; however, these plans are not very feasible due to lack of legislation, heavy capital expenditure (for example, for hydro and combined-cycle gas turbines) and the time taken to bring online,” Paul Moynihan, general manager of engineering and construction firm RJE Myanmar, told OBG.

Sharing the investment burden through joint ventures could improve the feasibility of such projects, but the current low level of prices to consumers, with electricity provided at or below production cost, will mean tariffs will have to be revised to incentivise investors.

As Myanmar moves towards an open economy, the public will have to accept paying for services at market rates, according to U Zeya Thura Mon, CEO of Zeya and Associates, a Yangon-based engineering and construction services firm.

“The people need to be educated about the actual costs for things, particularly electricity,” he told OBG. “If the government continues to subsidise electricity tariffs, then it will be difficult for the sector to grow.”

Industry hurdles

Shortfalls in electricity generation and delivery are one of the key obstacles for industrial growth as identified by the NLD government.

In late July the Ministry of Industry issued its plan for industrial development, based on the blueprint prepared by the former administration. While identifying development drivers, including the establishment of dedicated zones and transport corridors, the plan also identifies obstacles to industrial growth.

One of these challenges, along with the high cost of land and infrastructure shortfalls, is inadequate and unreliable electricity supply, the plan said. Disruptions to supply and insufficient access to power have limited industrial growth, forcing many manufacturers to rely on on-site generators to bridge shortfalls, adding to production costs.

Oxford Business Group is now on Instagram. Follow us here for news and stunning imagery from the more than 30 markets we cover.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Myanmar

Myanmar: Open for business

A new foreign investment law that offers investors broader access to Myanmar’s economy, as well as useful tax breaks, is expected to add new impetus to the country’s development and is a landmark...

In Energy

Maroc : L’exploitation des phosphates s’intensifie

La production marocaine de phosphates et de produits dérivés, comme les engrais, devrait connaître une hausse considérable. En effet, l’Office Chérifien des Phosphates (OCP), qui détient le...

Latest

Turkey's Prime Minister Ecevit in the US

The Turkish Prime Minister Bulent Ecevit has spent the last week in the US hoping to garner support for economic reforms at home and trade concessions for Turkish exports to the US.