Is This the Wrong Century for Coal to be King in Burma?

By William Boot 28 March 2013

The plan by Indonesian company Bukit Asam to invest in building a coal-fired electricity-generating station in Burma is the third by a foreign business to see coal as a potential quick-fix solution to the country’s woeful power shortage.

Malaysia’s Mudajaya Group in February proposed building Burma’s biggest power plant, a 500 megawatt coal-fueled facility in Mandalay, and Thailand’s construction firm ITD earlier declared hopes for a major coal venture to power its ambitious port plans at Dawei on Burma’s southeast coast.

But there are major problems associated with such aims. First, there isn’t a lot of coal available. Second, the Naypyidaw government doesn’t seem very keen on coal-fueled projects.

Naypyidaw blocked plans by ITD to build a massive 4,000 MW coal-fueled power station at Dawei, supposedly on environmental grounds. The Mudajaya Group says its plant is subject to what it termed feasibility studies plus copper-bottomed investment reassurances from the Mandalay authorities.

Bukit Asam meanwhile proposes a 200 MW coal power plant located at the mouth of a coal mine which probably does not exist yet. The Indonesian government-owned coal company said it planned to invest up to US $80 million in Burma.

“There is already a research team that has done a study on it,” Bukit Asam’s corporate secretary Joko Pramono told the Jakarta Globe newspaper, without disclosing where his firm proposed to mine in Burma.

Bukit Asam is working on a similar coal-mouth mine and power-plant investment with an international flavor as it seeks to diversify from an Indonesian coal industry suffering from a regional slump. This is in Indonesia’s northern Sumatra Island, but instead of supplying electricity to the domestic market which suffers severe shortages, it is planning to export power via undersea cable across the Malacca Strait to Malaysia.

If all three Burma coal projects became a reality, they would more than double Burma’s electricity-generating capacity, but concurrently there would need to be an improvement and expansion of the country’s dilapidated electricity-distribution infrastructure.

Burma’s main coal resources are located in the central region in about a dozen small fields dotted around Mandalay. There has not been a detailed geological survey for years and estimates of reserves range from the Ministry of Energy’s 270 million tonnes to 750 million tonnes suggested by the US’s Energy Information Agency.

There are only three or four mines in production on a commercial scale, delivering about 1.5 million tonnes per year. Only one of these fuels a power plant, near Pinlaung in Shan State.

Fuelling the power plants proposed by the Indonesian, Malaysian and Thai firms would require about 10 million tonnes of coal per year, depending on the efficiency of the installed equipment, Hong Kong-based energy industries analyst Vince Lomax told The Irrawaddy.

The Tigyit open-cast mine and a 120 MW power plant at Pinlaung, built by the China National Heavy Machinery Corporation in a partnership with military-linked firms, predates recent concerns for the environment voiced by President Thein Sein’s government.

Built cheaply, it operates without most of the filtering technology available to reduce ash, sulphur and CO2 emissions, according to Source Watch of the US.

“If the Myanmar government is really concerned to avoid the pollution problems of some other countries in the region it might want to consider using natural gas rather than coal,” analyst Lomax said. “Gas is much cleaner burning and it’s a major resource in the country. On the other hand, gas turbine equipment is more expensive than plants for coal-burning systems.”

Burma’s Ministry of Energy has previously declared that from this year any new natural gas discoveries will be subject to priority domestic consumption rules ahead of export.

The outbreak of communal violence across central Burma has heightened concerns that the army generals might be induced to move back to take full control of the country and make foreign investors pause in committing to large capital projects. This concern has not been helped by calls for the European Union not to permanently abandon its suspended economic sanctions against Burma when they come up for review soon.

The EU only suspended its sanctions in 2012 for one year pending a review of reform progress on April 22 this year.

“We are concerned that the premature lifting of European Union sanctions will undermine the reform process in Burma, and could even encourage further serious human rights abuses,” said the European Burma Network, comprising 12 NGOs from Sweden to Italy, in a statement on March 26.

“We believe that European Union members have a tendency to highlight the positives while ignoring some important and harsh realities on the ground.”

The Network said the EU’s conditions for finally ending sanctions have not yet been met and human rights abuses continue in Burma.

Meanwhile, the only quick-fix seemingly readily available for the Naypyidaw government to ease Burma’s acute electricity shortages is more expensive and temporary portable generators.

Japanese media reported this week that Mitsubishi Heavy Industries has sent more than a dozen diesel-fueled generators to Rangoon. They have a combined electricity generating capacity of 13,000 kilowatts, or 1.3 MW—enough energy to power a few hundred homes for a few hours.