Myanmar: K722 million to fund two state-owned electric power firms

Myanmar: K722 million to fund two state-owned electric power firms

According to the 2017 Union Budget Law, K722 million has been allocated for
Yangon and Mandalay electricity corporations - K529 million will go to the
Yangon Electricity Supply Corporation (YESC) and Mandalay Electricity Supply
Corporation (MESC) will receive the rest, K243 million. Both are state-owned
organisations under the Ministry of Electricity and Energy.

Foreign loans as well as loans from Asian Development Bank (ADB), World Bank
and Japan International Cooperation Agency (JICA) are included in the budget
set for the YESC. This budget is not within the scope of funds set for the
Union government. The administration does not need to pay, since the
corresponding corporation will take financial responsibility for it and pay
off the loans, U Tun Kywe, CEO of Yangon Electricity Supply Corporation,
told the Myanmar Times.

"We have to report to the Ministry of Planning and Finance on our yearly
revenue and about the businesses that we want to do this year, including the
expenditure that we are permitted to use. This money is the corporation's
money, not the state's money," he said.

The amount of allocated funds is based on budget requests made by the
respective ministries. The profits gained from the electricity corporations
will be distributed as funds, rather than using the union budget. Although
the government is generating electricity at a financial loss, the two
electric corporations have healthy profit margins.

Yangon Electricity Supply Corporation gains a net profit of K20 billion
annually from electricity distribution, after deducting wage, employee
expenses and other expenditure, he added.

"We purchase electricity from the government and distribute it. The profits
gained are used to operate the corporation. The corporations cannot request
budgets from the government, and they cannot function without profit.
Without profit, we have to shut down the corporations," he explained.

The funds allocated for this fiscal year will be distributed among
respective townships in the Yangon region and will support four districts to
develop power supply.

Power distribution stations will be built, while current power stations are
upgraded to meet the demands by the growing population and increasing
consumption. Moreover, the newer models replace the older ones, and new
cables with covers are installed to reduce power cut and to prevent
accidents arising from electrocution. Small transformers will also be
constructed to provide enough power supply to the public, he continued.

Both the YESC and the MESC are distributing electricity to the public by
buying power from Electricity Generation Enterprise in accordance with a
fixed price set by the government.

The fixed price per unit is relatively low, therefore, electricity is being
sold at K57 in Yangon and K52 in Mandalay in order to help these
corporations to turn a profit.

These electricity supply corporations re-sell electricity to the public at
K35, K40 and K50 per unit, and K75, K125 and K150 per unit for industrial
zones.

However, the price hardly offsets the cost of production per unit. The
government's electric power industry is running an annual loss, and this is
increasingly a problem for the population and the government.

According to the Ministry of Electricity and Energy, Myanmar's demand for
electricity has increased annually, but power supply has been insufficient.
6.5 million out of 10 million households have no access to electricity, and
barely 3.5 million has received standard electrical supplies. Although
electricity consumption has skyrocketed by over 100 percent, there are still
cities with little to no electricity. For the next three to four years, more
than 4500MW of electricity are estimated to be consumed, and usage for this
summer could increase by 3300MW or 3500MW.

Other experts pointed out that finances have not been sufficient to fund the
completion of hydroelectric station in time, and investments are inadequate
in the sector. New supply of power cannot fulfil the demands of the
industrial zones in time.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
http://www.mmtimes.com/index.php/business/25596-k722-million-to-fund-two-sta
te-owned-electric-power-firms.html

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com