World Bank eyes Myanmar electricity sector as ties expand

WASHINGTON Fri Feb 15, 2013 4:30pm EST

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WASHINGTON Feb 15 (Reuters) - The World Bank is discussing plans to add 120 MW of electricity in Myanmar - enough to provide power to five million people - in support of the Southeast Asian country's reforms after debt arrears were cleared, a senior bank official said on Friday.

"Unfortunately only 25 percent of the population have access to electricity, so clearly there is an enormous challenge and our medium-term agenda is ... to turn on the lights, particularly in the rural areas," said Axel van Trotsenburg, the bank's East Asia and Pacific Region vice president.

"We would like to see that there is a much broader-based sharing of development and electricity will be important there," he told reporters in Washington, following a five-day tour of the country also known as Burma.

Myanmar President Thein Sein, who heads a quasi-civilian government, has freed political prisoners, unmuzzled the media and begun to reform the economy. In response, Western countries have eased sanctions imposed on the military regime.

The country, resource-rich but underdeveloped after decades of isolation, cleared a major hurdle to getting help from international financial institutions last month when it cleared about $420 million in debt arrears accumulated under the military.

The World Bank has approved $165 million in interest-free, long-term International Development Association loans to expand access to electricity and other potential projects, said van Trotsenburg.

Another $440 million credit agreed last month will support macroeconomic stability and help Myanmar meet foreign exchange needs, including repaying a bridge loan Japan provided to clear the debt arrears, the bank said in a statement.

Lending to support the electricity upgrade would replace outdated, 40-year-old gas turbines with new ones that were 2.5 times as efficient, helping expand rural access to power and reduce brown outs in cities.

The Dutch-Austrian economist, a 25-year veteran of the World Bank, said the delegation he took to Myanmar met government officials and private sector and civil society leaders and "came away very, very encouraged."

"What has been very positive is that you feel the wind of change and you feel also the desire to get development (going) forward in the country," said van Trotsenburg. (Reporting by Paul Eckert; Editing by David Gregorio)

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