Burmese ministry talks target of 100% electrification by 2030

Myanmar has one of the lowest rates of electrification in Southeast Asia, with about 30 percent of people drawing their lighting from electricity. Yet the country is well-endowed with the resources that are necessary to keep the lights on.

Transforming these resources from potential energy sources to powering the country will be tough work. The government has been developing an array of strategies and plans to get the sector going, with significant international help. It is not only generation that is due for an upgrade – transmission and distribution, off-grid energy, and areas like planning, financial sustainability and regulatory developments need to be worked on.

The country’s resources are vast.

There is the theoretical potential to generate 108,000 megawatts from hydro, estimated reserves of 711 million tonnes of coal, annual sustainable wood fuel yield of 19.12 million cubic tonnes, and theoretical wind power capacity of 365,100 terawatt hours (TWh) and solar power capacity of 51,973TWh. It also has proven oils reserves of 459 million barrels per day and 11.8 trillion cubic feet of proven natural gas reserves, both on and offshore.

The Ministry of Electric Power is tasked with taking advantage of Myanmar’s possibilities to meet an ambitious goal – 100pc of the country’s population by 2030. It generates, transmits and distributes electric power.

The Myanmar Times’ Aung Shin sat down with deputy minister U Maw Thar Htwe and the officials in charge of the ministry’s different divisions to discuss what needs to happen over the next 15 years to reach this target.

First off, what is our current generation capacity?

At present, we are generating from 39 power plants, including 25 hydropower stations, 13 gas-fired power plants and one coal plant. Total installed capacity is 4839.9 megawatts. It’s the lowest capacity rate [per capita] in Southeast Asia.

Our daily generation capacity is around 43,500 kilowatt hours.

What are the difficulties in developing the electricity sector to ensure Myanmar has enough power?

The ageing transmission lines cannot load all electricity generated from power stations. We need to install transmission lines, but at the same time we are developing new generation plants. The key issues in electricity are capital investment and technology.

Another major difficult is waiting a long time for public acceptance of implementing some major generating projects, such as hydro and coal.

What are the ministry’s plans on addressing these difficulties? How are the electricity projects going?

We have a number of plans and projects now being worked on. A key one is the Electricity Master Plan, drafting with the help of Japan International Cooperation Agency. The drafting is almost done.

The master plans says to receive electrification rates of 100pc by 2030 we will need installed capacity of 23,594 megawatts. We have to focus on a mix of generation, including hydro, gas, coal and renewable energy, because we can’t rely on only one source for power.

Coal and gas-fired generation will be the base-load generation as hydro and renewable are not available to generate the same load all the time.

The objective of the master plan is to produce electricity based on a mix-generation system. The plan’s ambition is to distribute a stable supply at a reasonable price.

So what will be the future mix of generation?

Hydro currently accounts for 65pc of generation, gas power for 33pc and coal for 2pc in the present installed capacity of 4840MW. There is no renewable energy at the moment.

By 2020, that will change. Hydro will be reduced to 54pc, gas and coal power to 22pc each, and renewable will account for 2pc of total capacity, which will be 8815MW.

And in 2030, hydro will only be 38pc, while gas power will be 20pc, coal power at 33pc and renewable at 9pc. Total installed capacity will climb to 23,594MW.

Here I would like to add more about renewable energy. Many people believe we can generate enough electricity from solar and wind, as our country is very hot and frequently windy. But this is not technically true.

It is very important we have a controlled power system that has stable electricity for transmission and distribution. Otherwise we will never be able to solve problems of power cuts and line faults which come from having an unstable power supply. That’s why we are going to push coal and gas-fired power plants for stable power, supported by hydro and renewable power at the same time.

No country in the world uses renewable energy for more than 10pc of their electricity generation.

Can you share with us more about the National Electrification Plan, which is going to be implemented with a loan from the World Bank?

The Ministry of Electric Power will spend US$310 million for expansion of transmission lines and another $90 million by the Ministry of Livestock, Fishery and Rural Development for rural electrification [off-grid power]. It is a soft loan with no interest, but we have to pay a service charge of 0.75pc over the 32-year repayment period.

There are three steps to rural electrification in the plan. The first is electrification of the areas within 2 miles (3.2 kilometres) of the national grid. After that, this will be extended to 50km (31 miles), and in the third stage to create electricity access in areas far away from the national grid.

What’s the annual state budget for the Ministry of Electric Power each year, and how is the ministry spending it?

In the past, all electricity projects were budgeted by state. Today, there are three different methods, as the state cannot afford all projects. The first method is to implement projects using the state budget. The second is allowing domestic companies to build based on build, operate, transfer principles. Thirdly, we allow foreign investments as part of joint ventures with the government or local companies.

So how many build, operate, transfer and joint venture projects are in the electricity sector at present?

There are eight state-owned projects, six build, operate, transfer projects and 41 joint ventures. At this point, you might be surprised to know there are so many foreign investment projects, but there are many steps in implement joint ventures. Some of them are only in memorandum of understanding status. There have only between two joint ventures that have been allowed to be implemented on the ground. These two are Myitsone in Kachin State and Kunlon on the Salween [Thanlwin] River in Shan State. The others are still in the feasibility study stage.

We are still hearing about Myitsone, which Chinese company CPI is trying to restart, and also about Kunlon, which is being opposed by local people and civil society groups. What is the latest status of these two major hydropower projects?

As everybody knows, Myitsone was suspended by President U Thein Sein. We don’t know what will come with the next government.

For Kunlon, we asked to developer to conduct an environmental and social impact assessment survey, as the feasibility study is complete. We asked for the environmental and social impact assessment before the project is implemented, because it is a big hydropower project that is 1400MW. These surveys are conducted by third parties.

What are the environmental and social impact assessment standards for hydropower, and how are the surveys viewed?

Environmental and social impact assessments must meet the standard of the Asian Development bank, and we use World Bank standards for coal power projects, but also welcome the Japan standard for coal projects. We have a number of experts and technicians in our ministry to view feasibility study reports. But the environmental and social impact assessments are viewed by the Department of Environmental Conservation.

Also, for some big hydropower projects like Kunlon, we ask international institutions to review them.

What are the impacts of opposition from public and civil society groups on hydropower and coal-fired power? What will the government’s solution be on these issues?

We have asked companies to meet with the public to explain, until they understand or agree. So far we haven’t started any project, as there isn’t one where everyone agrees totally.

What will the impact be? It is not certain our master plan will be successful by 2030 if we take so much time. It depends on people, and you, the media, which can shape whatever the understanding is, negative or positive, of any particular project.

How can the government protect against possible negative impacts of hydro and coal power projects?

First of all, you must be aware that there is technology which can solve some environmental impacts, for example from Japan. Secondly, people have to understand how we are applying international standard rules and regulations. If any power plant or project causes negative effects on the environment and society, we can shut them down.

But how will businessmen dare to invest in projects worth millions of dollars if anything is unsure? People have to understand that.

I’m curious about income from electricity sales after new the electricity price was approved, which started in April. What are the losses and gains from electricity subsidisation at the present price?

We are still losing at present. In our country, electricity consumption comes mostly from low-income households. Around 56pc of consumers are using electricity in households at prices of K35 per kilowatt hour. Meanwhile, the cost of generation is from K35 to K70 for hydropower and K120 to K130 for gas. On average, around 75pc [of the ministry’s customers] use K100 per kilowatt hour, and only 25pc is industry, which uses a higher price.

So the income does not cover all the costs of generation, transmission and distribution, and one more thing is power loss. Another reason there is less income being earned is because of the lessening ratio of hydropower, even though production costs are low.

Electricity prices have increased by 40 to 50pc [in the last year]. How much profit or loss is the ministry making at present?

At the end of the last financial year, profits were K3 to K4 per kilowatt hour. But if we include our capital expenditures, we can’t say we are making a profit.

Subsidisation of current electricity distribution is likely to continue at current prices. For the longer term, we [the government] can’t stand without profit.

When do you expect to increase the electricity price to reduce subsidisation?

It depends on the consumers, on when people can pay higher prices and parliament can understand that. Without parliament’s agreement, we can’t change the price.

It is likely to happen once every two years, if everyone agrees.

For the time being, subsidisation of electricity distribution will continue for longer. – MMTimes.com