As reforms aimed at integrating Myanmar into the world economy gather pace, the country is making efforts to boost its power generation capacity. The Myanmar National Electrification Plan (NEP) aims to achieve 100% electrification by 2030, an ambitious plan given that as of September 2014, only 33% of the population had access to electricity, the peak load is 2171 MW and per-capita consumption is at 232 KWh. Public buildings such as schools, hospitals, as well as local businesses in rural areas all have limited access. According to the Ministry of Electric Power (MOEP), full electrification would require more than 7.2m households to be connected over the next 16 years. An independent report submitted to the MOEP said that this would necessitate increasing the number of household connections from 189,000 yearly to an average of 450,000 a year.
The main body responsible for overseeing electricity is the MOEP, which underwent a reorganisation in 2012, and comprises seven agencies, namely, the Department of Hydropower Planning; the Department of Hydropower Implementation; Hydropower Generation Enterprises (responsible for power generation); the Department of Electric Power; Myanma Electric Power Enterprise (responsible for transmission, generation and system operations); the Electricity Supply Enterprise, and lastly, the Yangon City Electricity Supply Board (both responsible for distribution).
Furthermore, in 2013, the government formed a National Energy Management Committee (NEMC) and an Energy Development Committee (EDC) so as to better coordinate administrative processes among the various ministries and agencies. The ministerial-level NEMC holds responsibility for the formulation of energy policy and plans in coordination with other energy-related ministries.
Meanwhile, the EDC is a lower-level committee charged with implementing the policies of the NEMC. To complement these reforms, the government also introduced a draft law to govern electricity in 2013 to replace the 1984 Electric Law. The new draft law allows local authorities to issue licences to private investors, depending on the size of the projects. However, the state will retain control over power generation, transmission and trade, while creating an electricity regulatory commission to oversee the implementation of the NEP.
The government aims for at least 90% of connections to be grid-based, and has also been looking into off-grid renewable energy power through the development of mini-grid hydro plants and off-grid solar home solutions. According to the MOEP, Myanmar can expect to see 47% electrification by 2020, 76% by 2025, and 100% by 2030. Myanmar has also worked to improve its electrical infrastructure by building more transmission and distribution lines, sub-stations and dams to generate more power. Moreover, the Myanmar Investment Commission has introduced tax benefits for foreign investors, while the government has upgraded its laws to make them compatible with the NEP. Overall, Myanmar is currently looking at spending about $5.8bn to introduce full electrification. “Local human power needs to be upgraded, and we need to create local experts. The government’s policy is thus to have joint ventures with international companies to obtain technological know-how,” U Ye Min Tun, consultant to the National Energy Group, told OBG.
The current installed capacity of electricity remains at 3495 MW, generated from 30 plants: 19 hydropower plants which generate 2660 MW of installed capacity, and 11 gas and steam plants that provide 835 MW. However, demand for electricity is swiftly outstripping available supply. Indeed, Myanmar’s capacity remains the lowest of any ASEAN state. By comparison, Thailand’s installed capacity is 32,600 MW and Vietnam produces 26,300 MW. Similarly, usage of watts per person in Myanmar is also relatively low at 75, compared to Thailand at 488 or Vietnam at 297. Further to this, the tariff rate (in US cents) in Myanmar is 3.50 while it is 11 and 6 in Thailand and Vietnam, respectively. Myanmar’s transmission lines run to 9720 km in length while the country’s distribution lines cover 22,570 km, with a total of 163 sub-stations. Hydropower plants generate almost 76% of Myanmar’s power, leading to a shortfall in the power supply during the dry seasons. In 2013, this shortfall was 509 MW, improving to 35 MW in 2014.
Myanmar is working on 17 new power plant projects due for completion by 2016, including the extension of the Kyunchaung and Shwedaung gas turbine plants, providing a total of 2311 MW of additional installed capacity. Of the 17 power plants, 10 were completed in 2013 and 2014, including the mega plants of Ywama (undertaken by a Thai firm), Hlawga (through a Chinese investor) and Thaketa (part of a Korean venture). In the long run, plans are afoot for another 87 power plants that can supply 54,608 MW of installed capacity.
Of these, the ministry plans to spearhead 10 hydropower plant projects, while the rest will be handled by foreign investors. With the construction of new power plants, transmission and distribution lines, and sub-stations in the pipeline, power supply is expected to meet growing demand in 2015 and 2016. However, in November 2014 local newspaper reports quoted the director of MOEP, U Myint Oo, as saying that Myanmar was planning to build 41 new power plants in 15 years to boost its electricity capacity to 29,000 MW in 2031. According to U Myint Oo, the government plans to shift away from its reliance on hydropower to other energy sources, including coal, natural gas, solar and wind power.
The government has worked to increase the amount of foreign investment in the power sector, with a significant chunk coming from China in particular. Foreign companies had invested $13bn in the power sector as of June 2014, with an additional $6bn in the process of receiving approval, according to the Directorate of Investment and Company Administration. MOEP has stated that the World Bank plans to invest up to $1bn in the sector, including electricity generation, transmission and distribution. The Asian Development Bank (ADB) has also approved a $60m loan to install transformers at sub-power stations, as well as replace ageing power cables. The ADB is also working to electrify 25 off-grid villages through a renewable energy project grant worth some $2m.
Private entrepreneurs have been allowed to engage in power production as independent power producers (IPPs) since 2012. Early in 2014, local media reported that Thailand-based Toyo Thai Corp was looking into investing $2.7bn in a 1280-MW coal-fired power plant in Mon State. The Singaporean firm Asiatech Energy won a bid to build a $170m combined-cycle, gas-fired power plant in Mawlamyaing Township, also in Mon State. The 230-MW power plant will produce enough electricity for around 5m people, to be distributed by the Myanmar Electrical Power Enterprise. Further to this, in February 2014, the Germany-based Caterpillar Energy Solutions started operations in the 52-MW Ywama Power Plant located in Insein Township, Yangon, to provide electrical power to the national grid. Also in 2014, Singapore-based Navigat Group invested $35m in a gas-fired 50-MW power plant in Yangon, while US-based APR Energy was invited to develop a 100-MW gas-fired plant in Kyauktse, Mandalay. Even so, Chinese firms have been contracted to build 45 of 50 planned hydroelectric projects.
Challenges remain on the path to full electrification. The country remains heavily reliant on hydropower generation, while there is a lack of domestic gas supply for gas-fired power generation, presenting a major obstacle to the functioning of IPPs. Moreover, a government increase in power subsidies to 40% in April 2014 has further reduced the profit margin of the IPPs. “The investors want competitive rates but the government is still subsidising end-users,” U Kyaw Kyaw Oo, the general manager of the business development office, Barons Machinery & Engineering, told OBG.
While the government has been slow to sign power purchase agreements with the IPPs, it has also signed memoranda of understanding with Thailand and China to sell electricity over an unspecified time period in November 2014. Under the deal as reported by local media, Myanmar will sell 10,000 MW of electricity to Thailand and 31,451 MW to China.
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