Business

Rangoon Govt Power Supplier to Become Corporate Entity

By Kyaw Hsu Mon 6 March 2015

RANGOON — The Yangon Electricity Supply Board (YESB) said it will become a government-owned corporate entity on April 1. The move will make the government utility provider financially independent from the Ministry of Electric Power and marks the first phase of a plan to privatize the electricity supplier of Burma’s biggest city.

Maung Maung Latt, YESB vice chairman, said the YESB will become the Yangon Electricity Supply Corporation (YESC) and appoint a Board of Directors in charge of the firm, adding that YESB’s roughly 4,000 staff members will remain employed by the corporation.

The corporation will be 100 percent state-owned but financially independent from the Electric Power Ministry, under which it currently falls. It will buy power from the ministry’s Myanmar Electricity and Power Enterprise and provide it to Rangoon, Maung Maung Latt said, adding that on a township level private companies would be put in charge of setting up transmission to distribute power to consumers.

He said the plan represented an intermediate phase of corporatization of YESB, which, if operations run well, will lead to complete privatization and YESB becoming a commercial company that is partially government-owned within three to four years.

Maung Maung Latt declined to reveal YESB’s annual revenues and costs.

“As the first step, the government will still handle the new process because we don’t have experience to form a corporation. But after we can run it smoothly, we’re going to work in the private sector,” he told The Irrawaddy.

He said a pilot project with private power distributors had started in East Dagon, South Dagon, Mingalardon and Htaukkyant townships, adding that on April 1 private supply would start in other townships.

Maung Maung Latt said outsourcing transmission to consumers to smaller private firms made more business sense and allow YESC to focus on improving the main power infrastructure.

“We will have to upgrade the transmission lines, underground lines and other technical system to be developed, so we will spend our money to upgrade this,” he said, adding that some 20 percent of all energy supplied to Rangoon was lost to due technical errors and outdated transmission infrastructure.

“We won’t raise the electricity prices due to this formation, but we will increase better services to the public,” he added.

Myat Thin Aung, chairman of Rangoon’s Hlaing Tharyar Industrial zone, said he welcomed the corporatization of YESB as he hoped it would improve power supply to the zone, which requires a 24-hour power supply but suffers from dry season black outs.

“The more we consume, the more they [YESB] earn, so if they can supply 24 hours a day we will appreciate this,” he said.

Under the previous military regime, the government and state enterprises directly controlled large parts of the economy, a situation that led to mismanagement and underinvestment in key utilities, such as energy supply and telecommunications infrastructure.

Burma’s commercial capital, which is home to its major industries and more than 5 million people, has suffered from chronic energy shortages further exacerbated by growing demand, in particular during the hot season when water levels in hydropower dam reservoirs drop.

YESB has been slowly improving power supply in recent years and the International Finance Corporation, an arm of the World Bank, has been assisting the Ministry of Electric Power with the corporatization of YESB. The IFC said in February 2014 that it might take an equity stake in the new corporation.

According to YESB figures, the total electricity production in Burma at March first week is 2,080 Megawatt per day and Rangoon’s total consumption was 970-Mw per day.

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