Burma’s economy is in danger of imitating its floundering western neighbor Bangladesh rather than its more dynamic eastern neighbor Thailand. The problem is not a lack of investment—it’s a lack of electricity.
An electricity shortage in Burma is nothing new, but it is becoming more acute as the country’s economy grows and more energy is needed to run busier factories, cool more hotel rooms and light up the cities, especially Rangoon and Mandalay.
Lack of electricity equals lack of investment, as Bangladesh has found to its great cost.
In the past year announcements have been made in Burma for plans for new power stations, fueled by coal, natural gas or renewable energy such as the sun, totaling 2,010 megawatts.
That’s 60 percent more than the total electricity generating capacity Burma has in theory at present.
However, none of these plans have moved beyond a boardroom blueprint and this week leaders of the Hlaing Tharyar Industrial Zone in Rangoon warned that continuing prolonged electricity cuts could lead to factory closures and job losses.
Factories that keep operating are using increasing volumes of expensive diesel to fuel back-up generators, and this in turn is pushing up costs. One factory owner in the Hlaing Tharyar Industrial Zone said his back-up generator consumed 16 gallons an hour.
“The problem is that while there has been a lot of talk about new power plants, nothing has actually been built,” regional energy industries consultant Collin Reynolds in Bangkok told The Irrawaddy.
“Power demand is now far in excess of generating capacity and it’s going to get worse. This mirrors what has been happening in Bangladesh for years. The government in Dhaka talks the talk about new power plants but little happens. The consequence there is that Bangladesh’s important textiles and garment industry constantly operates below par because of inadequate electricity.”
On paper things look good in Burma. Over the last 12 months, companies from Japan, Malaysia, Indonesia and Thailand have proposed building new power stations, some even signing memorandums of understanding with the Ministry of Electric Power. But nothing else has happened.
Malaysia’s Mudajaya Group said it would like to build a 500-megawatt coal-fired plant in Mandalay; Indonesian coal firm Bukit Asam said it would develop a 200-megawatt plant, where it has never been disclosed; a Japanese group was supposed to build a 500-megawatt project in Rangoon; and Thai companies said they would construct over 600 megawatts of capacity in Dawei and Naypyidaw.
None of them have moved beyond what they term the feasibility study stage. What they appear to lack is finance and investment assurances from the government.
This mirrors what has been happening for years in Bangladesh, where almost every week the government trumpets yet another power station plan.
In reality Bangladesh, with a population of 150 million, has a generating capacity of no more than 5,000 megawatts.
In comparison, Burma’s eastern neighbor Thailand, with a population of about 60 million, has a national generating capacity of around 27,000 megawatts—which helps explain why foreign industries like Japan’s auto manufacturing build factories there, and not in Bangladesh or Burma.
Bangladesh advertises its inadequacies to the world with frequent street protests in the capital Dhaka by workers in the textile industry who lose wages due to power cut-induced production stoppages.
In fact, electricity distribution is worse in Burma than in Bangladesh.
Only 26 percent of Burma’s estimated 55 million people have access to mains electricity, a recent study by the Asian Development Bank (ADB) said.
The inadequacy of Burma’s electricity supply and distribution was highlighted in an ADB report which put the country’s installed electricity generating capacity at 3,360 megawatts. But Burma’s actual generating capability is much less because of dilapidated infrastructure and aging and inefficient plants. That problem is exacerbated by hydroelectric systems which cannot deliver at full capacity in the dry season due to low water levels.
The Naypyidaw government’s attempts at a quick improvement in electricity supply in key areas such as Rangoon are proving inadequate and expensive.
In March, Mitsubishi Heavy Industries of Japan sent more than a dozen diesel-fueled generators to Rangoon. It sounded impressive, but the Japanese developers of the Thilawa Economic Zone complained in April that a lack of electricity was one of the major problems hampering progress.
The Mitsubishi generators have a combined electricity making capacity of 13,000 kilowatts, which translates to 1.3 megawatts—enough energy for several hundred homes for less than 48 hours.
In June 2012, the Naypyidaw government said a Japanese consortium would build a large gas-fueled power plant for Rangoon and Thilawa.
On May 6 this year, Reuters reported that a consortium of five South Korean companies would build a 500-megawatt plant for Thilawa.
“They have recently appointed [Japanese] Mizuho Corporate Bank as the financial adviser to the project which is estimated to cost US $700 million. Mizuho is expected to handle negotiations with the government as well as manage the fundraising.”
Those two dates, and the gap of almost one year, underline the Bangladesh syndrome that Burma is facing.