Myanmar’s Electricity Sector Crippled Since Military Coup
By The Irrawaddy 15 July 2021
The military coup has created a crisis in Myanmar’s electricity sector, which has lost billions of dollars in income and been beset by prolonged power outages across the country due to mismanagement by the junta and the public’s refusal to support the regime, Independent Economists for Myanmar (IEM), a group of anonymous experts, warned.
The IEM said the regime’s Ministry of Electricity and Energy (MOEE) was collecting 100 billion kyats (about US$61 million) less per month due to a boycott campaign launched by pro-democracy activists. The bill collection rates in the country’s two major commercial cities, Yangon and Mandalay, were as low as 2 percent and 3 percent respectively as of March, according to the IEM.
It said losses in the electricity sector could reach 2-2.5 trillion kyats this year, representing approximately 10 percent of all fiscal revenue.
Since the coup, as part of a wider campaign expressing opposition to the junta, most people in Myanmar are refusing to pay their electricity bills. The payment boycott is widely viewed as a low-risk way of voicing opposition to the regime while also preventing it from accessing funds. Moreover, thousands of meter readers and township and ward MOEE office staff are participating in the Civil Disobedience Movement (CDM), under which government employees and others are refusing to work for the regime.
After nearly five months of people ignoring power bills, the regime has threatened to disconnect the meters of those who don’t pay. However, the regime’s employees have been attacked and killed on the streets. At least nine Yangon electricity distribution offices have been targeted, as have offices in Bago Region and Shan State.
The IEM said the regime had created not only a short-term financing gap for the electricity sector, but also a longer-term decline in power supply in the country.
Since the source of the electricity is largely hydropower and domestically produced gas, there are few implications for foreign currency depletion. However, the IEM pointed out that there are implications for inflation and the electricity supply, as the regime must choose between expanding the money supply to cover the growing deficit, largely caused by energy sector costs, and cutting electricity purchases from private sector producers.
“Given the scale of dismissals at [the] MOEE, especially among technical staff, maintaining the grid may also soon become a challenge. Power outages are likely to become more common and longer,” the IEM said.
According to the group, a total of 4,058 staff from the MOEE were dismissed by the junta for participating in the CDM.
Since late June, people across the country have faced frequent blackouts. Some townships in Yangon have faced more than 16 hours of blackouts as they refused to pay their bills, according to residents.
Since the coup, the MOEE has struggled to operate existing infrastructure, to honor its contractual obligations to independent power producers, to cover its costs, and to follow through on the previous regime’s pipeline of new projects, the IEM said.
Over the longer term, the electricity supply is likely to suffer and possibly decline, it said. Offshore gas fields are being depleted and replacement fields will likely not come online as originally planned. Rental gas plant projects are affected by land issues and uncertainty about the regime’s ability to honor costly payment contracts, according to the group.
New hydropower projects are either suspended or unlikely to move ahead due to violent conflict in regions where large-scale projects are planned, it said.
Under the National League for Democracy (NLD) government, the MOEE set a deadline of 2030-31 for 100 percent of the population to have access to power. Looking to raise foreign currency amid Western companies’ refusal to work with the regime, the MOEE sought tenders to implement 12 solar power projects last month. Some 40 firms including four Thai and five Chinese companies have expressed interest in the projects.
However, the IEM said that solar farms are unlikely to produce the intended scale of electricity given the lack of competitiveness of the most recent tenders and the inexperience of the winning companies.
“Impulsive and ill-informed decision-making by the ruling State Administrative Council (SAC) has heightened country risk for energy sector investors,” the IEM said.
Following the coup, some investors—such as Electricité de France, Woodside and the mostly Chinese winners of the previous solar tender—have suspended their activities or pulled out of the country entirely, and many are taking a “wait-and-see” approach to future projects. The World Bank has also suspended all disbursements for electrification projects and negotiations for subsequent loans are at a standstill.
“In this context, the energy sector is set to miss its 2021 deadline. The resulting supply crunch could ripple through the economy for years,” IEM said.
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