Aug 14, 2012

Myanmar seeks help to build 21st century grid

Myanmar has started discussions with foreign companies in a bid to transform its dilapidated national electricity grid, a vital component of the country’s economic reforms.

President Thein Sein earlier this year identified electricity generation and supply as a key component of a “second phase” of reforms which included providing power to 75% of the population within the next decade.

For electricity-starved Myanmar, this represents a hugely ambitious project that would require expanding generating capacity from 1,100 megawatts last year to more than 16,500 MW by 2022 at an estimated cost of up to US$20 billion. Currently, only about a quarter of Myanmar’s population of 60 million has an electricity supply, according to UN data.

“It means building a power plant with a generation capacity from 500 to 1,000 megawatts yearly,” said Thein Sein.

He identified hydropower, gas and coal plants as the main sources, adding that Myanmar would seek to import electricity in what appeared to be a major departure from the country’s recent policy on energy.

During protests in Yangon, Mandalay and other big cities in May in which people voiced their dissatisfaction with the lack of power, demonstrators criticised the government for building dams that would be used to sell electricity to other countries in the region.

In June’s policy speech, the president made regular references to the need for foreign help to overhaul its woefully inadequate power-supply sector as a host of overseas companies have visited Nay Pyi Daw to discuss potential projects.

In June, Somboom Arayaskul, the acting president of the Electricity Generating Authority of Thailand (Egat), met with Myanmar’s minister of electric power supply, Khin Maung Soe, to discuss plans to move two Mitsubishi gas turbine generators from Thailand to Myanmar.

The New Light of Myanmar, a state-run daily, reported that Egat presented a report to the Myanmar government outlining sites for the turbines, which were not identified, and a tentative schedule for their installation.

Myanmar technicians were reportedly due in Thailand to examine the turbines ahead of their relocation. Egat did not respond to questions when contacted.

Takashi Ikeda, the regional CEO of Sojitz Corporation, held meetings with the Myanmar government on the same day as Egat, during which the Japanese company proposed installing a 500-kilowatt power grid and a sub-power station.

The Canadian company SNC-Lavalin is already consulting for the Myanmar government as part of assessments to see whether it may invest in the power supply sector.

“It is just a very high level discussion for the moment with no particular projects identified yet,” said Leslie Quinton, a company spokesman.

Meanwhile, General Electric has agreed a deal to provide power-generating equipment to a hospital in Yangon and has held talks with the government to supply portable gas turbines.
The problem for Myanmar, though, is funding this rapid and costly investment. Having spent only $3.3 billion of state funds on electricity generation and supply between 1988 and the end of the 2011 financial year in March last year, Myanmar must now invest the same amount roughly every 18 months for the next decade if it is to meet its own ambitious targets.

Thein Sein identified foreign aid and investment, likely backed by low-interest foreign loans, as the main sources of capital to fund these projects given a lack of state funds.

Whether or not Myanmar meets its targets will not only have a major bearing on economic growth, it will also affect social harmony in a country that saw widespread demonstrations in May from ordinary people fed up with routine blackouts.

Wai Muu Thwin, who was among the first protesters to join the “candlelight demonstrations” in Yangon, said that in the first week of May his apartment in the centre of the city was only receiving six hours of electricity per day. That has since risen to between 10 and 12 hours, he added.

His home, which features a flat-screen television and DVD player powered by a car battery, has only ever received round-the-clock electricity during the three-month period prior to the November 2010 election, a sign the government has used power supply as a political weapon, said Wai Muu Thwin.

It is time for the government to improve its record on supplying power, he said, not only for the people of the country, but for small businesses and the overall health of the economy.
“The government should have a Plan B,” he said. “Without electricity there is nothing we can do.”

Source: Bangkok Post