Myanmar’s Union Parliament on Monday approved a US$171.27 million (232 billion kyats) loan for its Accelerated Rural Electrification Project from the Asian Development Bank (ADB) to improve access to the national grid in four of the least accessible areas.
The ADB loan will be used for the electrification of 400,300 households in 2,815 villages in Karen State and Ayeyarwady, Magwe and east Bago regions to access the national grid, according to the Ministry of Electricity and Energy.
U Khin Maung Win, the deputy minister of electricity and energy, told the Parliament on Monday that the project’s loan implementation focuses on areas where a low percentage of households have access to electricity.
The seven-year project is due to start in 2021. The ministry conducted a feasibility study in the areas from January to June. The project cost is estimated at $138.86 million (188 billion kyats) and the government is to share $20.47 million (28 billion kyats) of other costs, including social and environmental safeguarding.
The power project hopes to reach 223 villages in Karen State; 269 villages in eastern Bago Region; 383 villages in Magwe Region; and 1,940 villages in Ayeyarwady through around 1,000 km of transmission lines and 44 electrical substations.
Myanmar’s national grid has provided 50 percent of the country’s power needs since December, compared to 34 percent in 2016.
Parliamentarians debated the ADB loans last Friday with the deputy minister replying to their questions on Monday.
Myanmar has 10.8 million households and every year electricity demand increases by 15 percent, according to U Khin Maung Win.
Hydropower and natural gas are the main sources with coal, solar and three LNG (liquefied natural gas) plants helping to meet some shortfalls.
The project represented about 3.7 percent of Myanmar’s households, almost reaching the ministry’s target of 55 percent (nearly 6 million households) by the 2021-22 fiscal year.
The ministry has targeted national grid access of 75 percent by 2025-26 and 100 percent access by 2030.
U Maung Maung Win, the deputy minister of planning, finance and industry, said the project loan is concessional as its interest rate is 1-1.5 percent during its 32-year repayment period. He said the power plan is in accordance with the Myanmar Sustainable Development Plan (MSDP).
State Counselor Daw Aung San Suu Kyi also stressed in December that sufficient electrification contributes to the success of the MSDP.
U Maung Maung Win on July 16 told Parliament that the electricity ministry needs to ensure the loans are used properly to bring power to rural communities.
The ministry contracted $6.42 billion (8.7 trillion kyats) in foreign loans by March 31, of which $4.18 billion (5.7 trillion kyats) has been used already. The foreign debt on March 31 was nearly $3 billion, according to the Ministry of Planning, Finance and Industry.
The ADB supports projects boosting electricity supply, road networks and other transport infrastructure, telecommunications; water supplies and sanitation.
From 2013 to 2019, the ADB committed loans and grants of $2.4 billion (3.2 trillion kyats) in Myanmar.
It has committed to further support under its 2020-22 country operations business plan with a focus on energy, transport, education, skills training and health care.
Myanmar as of March 31 had $10.2 billion (13.8 trillion kyats) in foreign debts, representing 12.9 percent of GDP, according to the finance ministry.
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