Can Burma Solve Energy Gap Via its Asean Connections?

By William Boot 28 August 2012

Burma’s chronic shortage of electricity, which threatens to stymie economic growth, could be eased by pushing for acceleration of plans by the Association of Southeast Asian Nations (Asean) for a regional power grid.

Cross-border electricity swaps are growing as the 10-country bloc moves towards the goal of a single market by 2015. And one of the planks of the closer regional economic integration platform is a borderless energy network.

In a region where national self-interest and rivalry has been the rule for decades, Asean—45 years old this year—is playing an increasing role in forging closer business integration between its members.
Cooperation on power exchanges are being driven by rapidly rising demand and domestic production, which increasingly struggles to match it.

Asean plans for a regional power swapping grid are part of the organization’s ambitions for 2020. However, some countries are already developing electricity-swapping cross-border links and Burma could use its year as president of Asean in 2014 to push the project forward, say energy planners and experts.

There are already cross-border power links between Cambodia and Vietnam, Laos and Thailand, Malaysia and Singapore and now proposals for link ups between Burma and Thailand.

The biggest cross-border exchange of power supply so far is being developed between Malaysia and Indonesia, where state energy agencies have now inked two significant agreements on two-way electricity. This has all happened since March, when the Indonesian Parliament approved a law permitting the export of electricity for the first time.

The former governor of the state Electricity Generating Authority of Thailand (EGAT) and now a senior Thai government adviser on energy, Kraisi Kannasutr, has spoken in favor of Asean power integration as a way of benefiting economic development for Thailand and its neighbors.

He told a Bangkok Senate inquiry into energy that a regional power grid would reduce electricity costs overall by pumping power to where it was needed cheaper than producing it in situ.

For example, this would help the development of a port-industry complex at Dawei on Burma’s southeast coast, proposed by Thai firms but currently in limbo—partly because the project lacks energy.

Thailand has a generating capacity of 26,000 megawatts, which reaches most remote rural areas of the country, while Burma has a mere 1,800 megawatts capacity, reaching barely 25 percent of the population and then for only a few hours each day.

“Until recently, Thailand has sought to milk the energy resources of Burma for its own use the way China has,” Bangkok power industry consultant Collin Reynolds told The Irrawaddy on Aug. 25. “I think the Thais are now realizing that if they are to benefit from Burma’s economic development there will need to be cooperation on electricity supplies, just as there are plans for trans-border road and railway networks.”

An example of such a system already being forged is a cross-border grid linking Malaysia’s Borneo State of Sarawak with Kalimantan, Indonesia’s Borneo province. Separately, an undersea transmission cable is planned between Indonesia’s Sumatra and peninsular Malaysia’s west coast as a result of a coal mining and power plant joint venture.

Malaysian state power monopoly Tenaga Nasional Berhad, or TNB, is teaming up with its Indonesian counterpart PLN and Indonesia’s state-owned coal miner Bukit Asam.

The threesome will cooperate in a mining, power plant and power exchange project costing over US $2 billion.

A coal mine with a 6 million tonnes per annum capacity is to be built in Riau Province in Sumatra to feed a 1,250 MW plant. Electricity produced will be shared between PLN and TNB, who will also share the coast and ownership of a 53-km cable to be laid beneath the Malacca Strait and into Malaysia.

The agreement envisages Indonesia transmitting power to Malaysia during off-peak times and TNB reciprocating during its off-peak period.

Work on the mine is to start soon, according to Bukit Asam, with the power plant and cross-border cable scheduled for completion by 2017.

Peninsular Malaysia suffered power shortages for the first time in 2011 and the shortfall had to be plugged by buying electricity from Singapore. The shortages were triggered by a decline in domestic gas supplies on which TNB has been dependent for 70 percent of its system.

Ironically, Malaysia has a surfeit of electricity in its two Borneo states, Sarawak and Sabah, due the massive Bakun Dam which flooded an area of jungle the size of Singapore. Power from the multibillion dollar 2,400 MW dam project was originally meant to be transmitted to peninsular Malaysia by undersea cable across more than 500 km of the South China Sea, but TNB abandoned this long-held plan on cost grounds.

Instead, PLN will buy some of the Bakun capacity, which will be shipped across the border into power- hungry Kalimantan via a 120-km cable. When the first electricity flows in 2014 the West Kalimantan grid will have a 20 percent increase in its distributable supply.

Despite abundant coal resources, much of Kalimantan’s limited power supply is generated via expensive oil and diesel fuels.

Under-developed Laos is benefiting from deals in which Thai firms finance and build hydro dams on its side of the border, separated by the Mekong River. They pump much of the ensuing electricity into Thailand, but some power goes to Laos, which also earns income.

“The cooperation between Indonesia and Malaysia in energy is the best example yet of how countries within Asean are likely to increasingly merge their power systems,” Hong Kong-based energy industries analyst Vince Lomax told The Irrawaddy.

“In the short-medium term I think we will see a move by Thailand to boost Burma’s electricity supply. This will be necessary if Thai business is to benefit from investing in the emerging economy of its neighbor.”

However, plans by Thai firms, led by EGAT, to build a 1,280 MW hydro dam directly on the Mekong in Laos are meeting stiff opposition from Cambodia and Vietnam downstream.

They argue that a dam would undermine river flows and damage their freshwater fishing on which millions of people depend.

But as Asean’s economies grow and the combined 620 million population demands more electricity, it increasingly looks like compromises will have to be made.