Myanmar’s power sector has been in a downward spiral since the February 2021 coup and the prolonged electricity blackouts that have been a hallmark of military rule will likely worsen, according to a recent World Bank report and a former advisor to the Myanmar Ministry of Electricity and Energy.
Major cities, including Yangon, Mandalay, and Naypyitaw, are facing power outages while industrial zones across the country are bracing for crippling power cuts and surging fuel prices, according to the recent World Bank report “In The Dark: Power Sector Challenges in Myanmar.”
While electricity generation has been declining and widening the gap between supply and demand, damaged power infrastructure has also undermined the entire power transmission system. “Increasing the power supply–demand gap is the major challenge to securing reliable electricity services in the country,” said the World Bank.
Myanmar faced power shortages in 2019, of up to about 300 megawatts (MW), but the gap has widened since the coup. Even to sustain the current level of power supply, Myanmar would require adding between 300 to 400 MW every year until 2030, the World Bank report estimates.
Guillaume de Langre, a former adviser to the Myanmar Ministry of Electricity and Energy, noted on a recent Insight Myanmar podcast that as much as 50% of the country’s power grid is fuelled by domestically produced gas, which is expected to run out by 2030.
“Let me be clear,” he said, stressing:
“That means that the fuel that is used to produce 50% of the electricity in Myanmar is going to be extinct. It’s not being replaced. So, the question we have to ask ourselves today is, how does Myanmar go about functioning as an economy, when half of its power supply disappears?”
The power shortage is already affecting people in all walks of life. Power outages in Yangon have caused long queues at the compressed natural gas filling stations. This has a direct impact on buses operated by the Yangon Bus Services and taxis, resulting in a shortage of public transport services for commuters.
On the other hand, healthcare workers cannot keep essential medication and test samples refrigerated. Most industry, factory, and commercial buildings use their own diesel generators for operations during power outages. These outages negatively impact the competitiveness of the low-margin garment industry that dominates the country’s manufactured goods exports.
The World Bank expects that the power sector will continue to be hit by financial losses. Several factors affect sector financial sustainability, including currency depreciation, increasing grid maintenance costs, and a decline in revenue.
The prospects of achieving universal access to electricity by 2030 have dimmed, the World Bank report said.
It noted that between November 2020 and December 2021, the electrification rate at the household level increased from 57 percent to 61 percent, an only 3 percentage point annual rise, compared to the average 6 percent per year between 2017-2020.
The military takeover also triggered a country-wide boycott of electricity bill payments and the unpaid portion of electricity revenue increased over time, reaching up to 45 percent in November 2021.
Over a two-year period, the generation capacity available for dispatch has been reduced by more than 2.5 gigawatts (GW), due to various factors, including the suspended operation of two large LNG-fired plants in Yangon, low rainfall and water levels in hydropower reservoirs, and a supply shortage of domestic natural gas.
More than 2 GW of planned natural gas-based power plants involving foreign direct investment are on hold.
Langre said potential power investors do not trust the junta and many withdrew from power generation projects after the coup. Trust evaporated after the coup, he said.
The World Bank report said the junta is trying to rely more on hydropower. “To maximize the total daily power supply, electricity generation was ramped up from hydropower plants since mid-2021 to compensate for lower electricity generation from gas-fired power plants,” it said.
The regime used more hydroelectric reservoirs during the rainy season and consequently there was a sharp drop-off in the amount of water available for electricity production and irrigation in January 2022. In mid-2022, four hydropower units had to be temporarily disabled for maintenance operations, including the country’s second-biggest dam, Shweli-1, and this further reduced available capacity.
This resulted in an acute electricity shortage from January to May 2023, the World Bank report noted.
Based on junta figures, the World Bank said that the power grid had been attacked 229 times between 2021 February and 2023 April.
About 77 percent of existing power plants are within 10 kilometres of conflict-related fatalities. While the numbers of conflict-related events on electricity infrastructure have been declining since their peak in late 2021 and early 2022, the grid remains vulnerable.
In a bid to attract foreign funds for the country’s electricity sector, the junta waived tax on investment in the sector in February this year. Its Myanmar Investment Commission announced it would waive tax on the production and distribution of renewable energy, including solar.
The regime said it has made electricity a national priority for investment and will exempt or reduce tax on imported materials, machines, equipment, spare parts, and construction materials that are not available in Myanmar.
Langre was sceptical, explaining: “Based on the history of the development of electricity and energy [in Myanmar], we can mostly deduce that the military sees energy as a source of rent, and as a source of foreign currency to fund itself to buy weapons and to fund its cronies, but has little interest in developing energy … to improve the life of most people. That is not part of the agenda.”
