* Only 25 pct of Myanmar people have access to public power
* Cancellation of big projects spark investment uncertainty
* Gov't embraces hydropower, not gas to supply electricity
By a Reuters staff reporter
KYA-OH, Myanmar, April 16 The banging of Win
Maung's hammer echoes across the farming village of Kya-oh in
parched central Myanmar, as twilight descends upon its
His arms and legs streaked in oil, the 48-year-old is
struggling to repair a 22-horsepower diesel engine in a wheezing
generator, the only power source for about 200 villagers whose
homes will soon be enveloped by darkness. It is a familiar scene
in rural Myanmar.
"I'm not sure it can be fixed quickly. I'm not sure what the
problem is," he says.
Kya-oh lies in Myanmar's oil-rich heartlands but is not
connected to the nation's power grid, a problem shared by
hundreds of poor villages where electricity is elusive, and
homes are sometimes powered by car batteries or lit up at night
by the glow of campfires.
A year of dramatic political changes after half a century of
isolating military rule has convinced the West to start lifting
sanctions imposed years ago in response to human rights abuses,
encouraged by this month's historic by-elections that saw Nobel
Peace Prize-winning dissident Aung San Suu Kyi win a seat in
But the lack of a cheap and reliable energy supply could
slow an expected economic boom, forcing consumers and businesses
to rely on costly private generators and imported fuel.
For the multinational companies descending on one of Asia's
last frontier markets, the shortages are both a curse and a
blessing: some say the erratic power could lead them to delay
investments. Others see opportunity in expanding power supplies.
In Kya-oh, Win Maung charges each household 3,000 kyat
($3.65) a month for 2 1/2 hours of electricity a night,
and an extra 1,500 kyat if they own a television. That
translates into nearly a week's wage for some villagers, who,
like a third of the country's 60 million people, live on less
than a dollar a day.
"We do not believe the government will give us power, so we
have to do it ourselves," said Win Maung, shirtless and sweating
as he hovers over his broken engine. "We can only hope foreign
companies will come in and help us."
The unprecedented reforms over the past year have raised
expectations of a wave of foreign investment that could help
improve power supplies if the government gives priority to
fixing the sector.
But even if reform and capacity building progress quickly,
gains will take time. Western energy firms say that once
sanctions are lifted it will take at least two years to
significantly boost Myanmar's power capacity due to decades of
neglect and mismanagement.
"The power infrastructure is extremely important. That is
one of the main questions you hear from people looking to set up
manufacturing," said Jeremy Kloiser-Jones, chief executive of
Bagan Capital, a new private equity firm dedicated to investing
in Myanmar. Billions of dollars of investment in the power
sector would be needed, he said.
The government announced nationwide rolling blackouts on
April 2, the day after the historic landslide victory for
pro-democracy leader Suu Kyi and her other party members in
"Things are not going to change overnight. We have plans on
paper but implementing them in a country where we haven't
operated will obviously take some time," said a senior official
with a major Western company, who asked not to be identified
because sanctions are still in place.
Concern over power supply and future investment have been
exacerbated by the scrapping of two major electricity projects,
the China-led Myitsone dam and Thailand's Dawei coal-fired power
plant, by Myanmar's government, in an apparent response to
public concern over damage to the environment.
LEFT IN THE DARK
Power consumption in Myanmar, where only 25 percent of the
population has access to the national grid, is one of the lowest
in the world, averaging 104 kilowatts an hour per person, near
the same level as the Democratic Republic of Congo and Nepal,
according to the World Bank and Asian Development Bank.
Government officials believe demand would be at least double
if supply was available.
Neighboring Thailand, with a similar population of about 65
million, consumes 20 times more electricity per capita with
access available to more than 99 percent of its population,
thanks in part to natural gas imported from Myanmar.
"Needless to say, for a developing country, energy demand is
always a problem. We are always facing the big challenges with
demand and supply," Htin Aung, director general of the Ministry
of Energy's planning department, told an oil conference in
Yangon on March 28.
For those lucky enough to have access to the national grid,
the price of electricity varies sharply from one region to
another. In the commercial capital of Yangon, electricity costs
35 kyat per kilowatt hour but surges more than 12 times that
amount in the western city of Sittwe.
The government has embraced hydropower as the main source of
electricity for the immediate future, allowing the country to
continue exporting most of its natural gas output to Thailand,
rather than burn it. Myanmar will also pipe gas to China from
Hydroelectricity represents nearly 70 percent of Myanmar's
power generation, while natural gas fuels more than 20 percent
and coal 9 percent, according to the state-run Central
Installed power capacity for fiscal 2011-12 was estimated at
2,544 megawatts, up from 1,717 four years ago.
"The policy for the electric power sector is to employ gas
turbine power generation only for the short term and rely on
hydroelectric power as the vital source of energy sufficiency,"
Kyaw Sar Soe Naing, executive engineer for the Ministry of
Electric Power, told the same oil conference.
Relying on limited water resources for power, however, has
forced Myanmar to ration its electricity supplies, especially
during the dry season, which can last for half the year.
To keep the power on, businesses use their own generators
that run on diesel. The oil is purchased at fuel stations that
typically smuggle in supplies from Thailand and China due to
Myanmar's limited refining capacity.
At the Myanmar Treasure Resort in Bagan, for instance, the
94-room hotel spends the equivalent of about $100 an hour to run
both of its generators during a blackout, a heavy financial
burden in the dry season, said its deputy manager Myo Myo Latt.
Myanmar diesel imports are on the rise since the government
reformed the sector to facilitate imports by private companies,
surging to $1.39 billion in fiscal 2010-11 from $673 million the
Myanmar's government is optimistic that it will be able to
meet domestic power demand within a few years with help from
A senior official with a Western energy firm said his
company could increase Myanmar's power capacity by more than 15
percent, or an additional 400 megawatts, within a 26-month
period by simply upgrading the current infrastructure.
Much more could also be done with billions of dollars of
credit support and loans from multinational organisations such
as the Asian Development Bank, industry officials said.
"If the world is now going to be serious about welcoming
Myanmar into the fold, then multinational institutions are going
to have to open up funding opportunities," said Bagan Capital's
POWER AND CHINA
The country - the biggest in mainland Southeast Asia - has
more than 48 planned power projects, 45 of which are for
hydropower stations, that would boost installed capacity more
than 14 times to 36,635 megawatts, the ministry said.
But many of those projects have come under question
following September's unexpected scrapping of the Chinese-led
$3.6 billion Myitsone dam, Myanmar's largest hydropower project.
Myanmar said it canceled the project because of environmental
worries, but the decision was also seen as an attempt by its
government to distance itself from Beijing.
China's ties with Myanmar have since been strained, raising
concern over future investment from its second biggest trade
partner. Chinese firms, including state-owned China Power
Investment Corp and China Datang Corp, were due to
build at least 33 of the 45 planned hydropower stations, the
Myanmar could also help increase its power capacity by
tapping more into its natural gas reserves, estimated at between
11 trillion and 23 trillion cubic feet. An energy official said
a gas-fired power plant would likely be built at the
multibillion-dollar Dawei Special Industrial Zone after the
government halted construction of a 4,000 megawatt coal plant in
January due to environmental worries.
Myanmar's energy minister in January promised to keep gas
from new projects beyond 2013 for the country's fast-growing
energy needs, but would not use natural gas to power Dawei.
The country produces about 1.47 billion cubic feet of gas
per day (cfd), but exports 1.2 billion cfd to Thailand. The 270
million cfd kept at home met only 48 percent of domestic demand,
according to Zaw Aung, director of planning for the state-run
Myanma Oil & Gas Enterprise.
"We are now very much deficient in natural gas for our
domestic utilisation," said the Ministry of Energy's Htin Aung.
"Natural gas to the private sector is negligible with just 1
percent of our supply. In the future, we plan to give the
private sector more gas."
Back in Kya-oh, promises and plans mean little for Kyaw Soe
Khaing, who faces a night without light if his friend, Win
Maung, doesn't fix the village engine before sunset.
"Electricity for us is a luxury," the snack seller said with
a smile. "We can manage without it, we have to make do with what