Energy Resources to Be Used for Domestic Needs in Future: Minister

By Simon Roughneen 6 June 2013

NAYPYIDAW — Speaking at the World Economic Forum (WEF) gathering in the Burmese capital on Thursday morning, Deputy Energy Minister Htin Aung said that in future Burma will only export energy resources after domestic demand has been met.

“We will not sell unless we fulfill our demand and then only if there is a surplus,” the deputy minister outlined, adding that new contracts for offshore oil and gas blocks would include a provision on the need to meet domestic needs.

“We will honor older contracts that do not say this,” he confirmed, saying that this assurance was needed “to protect our reputation for investors.”

Htin Aung, who was responding to a question from The Irrawaddy, said that in the past, Burma sold energy resources to neighboring countries because domestic demand was low and because Western sanctions had left the country without access to foreign currency

“If we did not do this we would have been left behind,” he added. Despite lucrative multibillion dollar sales of oil and particularly gas, to Thailand, Burma remains one of Asia’s poorest countries, at a similar stage of economic development to China in 1985, according to a report published last week by the McKinsey consultancy.

The deputy minister was speaking at the launch of a new study on Burma’s energy sector, “New Energy Architecture: Myanmar,” undertaken by the WEF in collaboration with the Ministry of Energy, the Manila-based Asian Development Bank (ADB) and Accenture, a consulting firm.

The report suggested options for energy reform in Burma going forward, in a sector that in the past has been blighted by allegations of graft and mismanagement.

“Without electricity and a reliable energy system, Myanmar’s economic progress will stall. Addressing this will require new sources of domestic energy, an expanded and modernized electricity grid, and innovative solutions for rural energy access.”

The report says that without energy sector reform, Burma’s much-vaunted economic potential could be stymied, given that 74 percent of the country’s population lacks electricity, and that factories in Rangoon often receive no more than four or five hours of power a day.

Prospective investors in Burma have cited the country’s limited and unreliable power supply as a deterrent.

Harnessing Burma’s resources to meet current and future energy needs will be difficult, however. Stephen P. Groff, vice president of the ADB, said on Thursday that it will take five years just to get the country geared up to meet current electricity needs, with only 16 percent of the rural population having grid access at present.

Groff added that much of Burma’s current electricity problems—such as brownouts and power shortages—could be addressed by better maintenance and repairs of the current antiquated grid.

However making use of Burma’s ample natural resources to generate power presents multiple challenges. While Burma has what is estimated as the world’s 46th largest natural gas reserves, getting the gas out and piped is another matter. Arthur Hanna, senior managing director of the energy industry at Accenture, cautioned that “proven reserves often does not equal proven production.”

Administrative reform is needed too, according to the new WEF report. With seven different ministries involved in the energy sector in Burma, Groff said “better coordination across and among these ministries is needed going forward.”