Jun 8, 2013

Power Grid, IFC may tie up for rural electrification, distribution in Myanmar rural areas

State-owned Power Grid Corp. of India Ltd is in talks with the International Finance Corporation (IFC) for participating in rural electrification and power distribution projects in Myanmar, said Khin San Yee, deputy minister for planning and economic development.

IFC, which has been in talks with the government of Myanmar, wants Power Grid to work with it on the projects in a country where electricity demand has been growing at a rate of 12%.

“We want to become a global transmission company,” said a top Power Grid executive, requesting anonymity. “We have been in discussions with IFC from some time back. IFC, in turn, has been in discussions with the Myanmar government for rural electrification and power distribution projects. It is in a very nascent stage.”

IFC couldn’t be immediately contacted.

“We have three priority areas,” said Khin San Yee. “They are rural electrification, rural water supply and rural transportation. On rural electrification, we are talking with IFC. We are very much appreciative of what Indian government has done for the electrification in its rural areas. We want to imitate that.”
More than 70% of Myanmar’s 60 million people live in rural areas, where the average electrification rate is a mere 16%. According to a World Economic Forum (WEF) report, only 26% of the country’s population has access to electricity.

Myanmar has an installed generation capacity of 6,300 megawatts (MW) with a low per capita power consumption of 100 units. The country faces load-shedding of 800MW, with high losses of 27% due to poor transmission and distribution, apart from theft.

Power Grid has a presence in Myanmar and was awarded a $64 million supply contract for a 230 kv transmission line and a sub-station. While these were awarded to the transmission firm based on the line of credit extended by India to Myanmar, Power Grid is pursuing another $100 million contract in the country for transmission links.

“Myanmar’s power sector is on a growth path,” said the Power Grid executive cited above.
Power Grid has been scouting for opportunities in neighbouring countries. It wants to enter these markets through the public-private partnership route and set up joint ventures.

The firm’s rationale to diversify business stems from the fact that the Indian power transmission market is regulated. Power Grid gets a guaranteed return on equity of 15.5% in India. Also, a planned separation of power management functions will leave it with only the task of setting up transmission links in India.
Power System Operation Corp. Ltd, a unit of Power Grid, is entrusted with power management functions and will be separated from its parent.

The WEF report titled New Energy Architecture: Myanmar, said during the dry season, low socio-economic neighbourhoods in Myanmar get electricity for only an hour, while prosperous districts get power for six to 12 hours. This is because hydro power generation accounts for 2,500MW of the country’s installed capacity. Trade between Myanmar and India accounts for $1.8 billion, of which Indian exports in fiscal 2013 were valued at $532 million, and imports at $1.33 billion. Trade has been pegged at $3 billion by 2015. India’s investments in Myanmar are likely to touch $2.6 billion in a few years from $273.5 million now. India is Myanmar’s fourth largest trading partner after Thailand, Singapore and China.

Source: HT Media