Myanmar set to undertake much-needed electricity reforms

Myanmar set to undertake much-needed electricity reforms

AS THE GOVERNMENT subsidy in the electricity sector amounted to Ks470
billion (Bt12.2 billion) last year, Myanmar plans to draw an effective
action plan to undertake electricity reforms urgently.

In a bid to seek advice from different stakeholders, the Stakeholders' Forum
on Electricity and Energy was held at the office of Union of Myanmar
Federation of Chamber of Commerce and Industry on Friday.

At the event, Tun Naing, deputy minister for Ministry of Electricity and
Energy, said that Myanmar should urgently find the best way to reduce the
government subsidy in the electricity sector so the whole population will
have access to electricity by 2030.

He said that only 35 per cent of the population have access to electricity.
He said the government is facing a lot of challenges to undertake national
grid expansion and building transmission and distribution lines for the
remaining 65 per cent of the population who do not have access to
electricity, due to the large amount of the subsidy.

"Now we collect Ks35-50 per unit [of electricity] for household use while we
charge Ks75-150 per unit for industrial use, depending on their usage. But
each unit costs Ks68 if we generate electricity from hydro stations while it
costs around Ks150 if we generate power from natural gas," he said.

"We also generate power by other means, so costs are different. On average,
production of each unit costs Ks92 but we receive only Ks69 from average
sale of per unit. So, the government has to subsidise Ks23 for sale of every
single unit.

"Those who have access to electricity here pay much less than the actual
cost for their use. Meanwhile, people from unconnected areas also have to
pay the same taxes as those who are already connected. If we favour 35 per
cent of the connected population, it seems unfair to the remaining 65 per
cent who are yet to have access to electricity. So, we need to decide
whether we should favour the minority or do it for the good of the
majority."

Tun Naing said that those who have access to electricity need to have the
courage to pay for the actual cost of power they use to ensure they do not
block the development of unconnected people. He said Myanmar's inclusive
growth depends entirely on national electrification.

The deputy minister's view is contradictory to what a regional authority
denied about widely spread rumours on potential electricity price hike at
the same event. Nilar Kyaw, minister for industry, electricity and
transportation of Yangon region government, said that there is no plan to
increase electricity price yet.

"We recently received a lot of queries on the news of increasing electricity
price threefold," she said. "Increasing collected price for electricity is
not as easy as expected. We need to take all the sides and economic
situation of the people into consideration.

"We need to calculate well, based on sound reasons and accurate figures. Our
[Yangon] prime minister did not say like that. We do not know who made the
rumours spread but it is groundless."

Yet, Nilar Kyaw also highlighted that the government subsidy in the energy
sector is too much. She expected the government could subsidise around Ks900
billion if it supplies 24-hour reliable power to all the connected areas in
2017-18.

She hinted that there could be electricity blackouts in Yangon in the hot
season that would starts next month. She said that in reality, it is really
hard to fulfil the growing demand, although power generation yearly
increases.

The city's power demand increases 15 per cent on a yearly basis, according
to the Yangon Electricity Supply Corporation.

According to Tun Naing, Myanmar needs to invest equally in three important
pillars - production, transmission and distribution. He said expansion and
maintenance of transmission lines and the distribution network is as
important as building new power plants.

"It is like preparing for dining. Giving someone a plate is not enough. We
also need to have rice and a pot," he said.

He said that as the nation's power demand surged by more than 200 per cent
over the past five years, the nation needs to increase its production at
least 500 megawatts per year. Meanwhile, Myanmar needs to reduce
transmission and distribution losses by using the latest technology. He
projected the nation would need a minimum 4,531MW in 2020-21.

In a bid to improve power production, the government has corporatised power
production since 2008. In 2009-10, independent power producers (IPPs) held
only 23.55 per cent of the production. But now IPPs hold 48.4 per cent of
power generation in Myanmar, while the government holds 51.6 per cent.

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Link to Original Article:
http://www.nationmultimedia.com/news/business/aec/30308010

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com