Parliament Approves $40M French Loan to Upgrade Hydropower Plants

By Nan Lwin 16 May 2019

YANGON—The Union Parliament approved on Thursday a €35.7-million (US$40 million or 60-billion kyats) loan from Agence Française de Développement (or the French Development Agency) to be used for major upgrades to five hydropower plants in four regions as Myanmar experiences country-wide waves of regular power cuts.

Of the 606 lawmakers in attendance, 546 voted in favor and seven voted against accepting the loan. The loan will have to be repaid at an interest rate of 0.68 percent within 20 years preceded by a seven-year interest-free grace period.

The loans will be used to carry out major maintenance works, including the assembly of new generators, at the Ye Nwe and Zaung Tu power plants in Bago Region, the Mone Chaung power plant in Magwe Region, the Kin Tar power plant in Mandalay Region and the Thapan Seik power plant in Sagaing Region.

Due to a lack of maintenance carried out on each plant for periods of between 10 and 35 years, they cannot currently operate at full capacity. Forced emergency shutdowns due to mechanical breakdowns cause these plants to lose 246 kilowatts of power per year, Deputy Minister of the Ministry of Electricity and Energy U Tun Naing said in Parliament.

Hydropower remains Myanmar’s main source of electricity, followed by natural gas and coal. According to the MOEE, the country faced power shortages of up to 400 megawatts in April. This is expected to rise by up to 1,588 megawatts in 2020.

Due to water shortages following severe high summer temperatures across the country and a low capacity to produce electricity at hydropower plants, major cities meanwhile are experiencing regular daily blackouts. The electric supply corporation in Yangon and Mandalay has been distributing electricity in rotational shifts, with blackouts lasting one hour or more at a time.

The proposal allocates $6 million for the repair of Ye Nwe power plant, $3.7 million for the Mone Chaung power plant, $18.4 million for the Zaung Tu power plant, $2.2 million for the Kin Tar power plant, $7.3 million for the Thapan Seik power plant and $1.9 million for the hiring of a consultancy firm for the projects.

The work is to expected to begin this year and be completed in 2024.

U Tun Naing said the plants will have the capacity to produce 646,000 megawatts in total after the repairs and earn the ministry $3.2 million per year.

U Htun Naing said according to the estimated income from selling excess electricity, the project will break even within eight years.

The loan receiver is supposed to pay back $2 million per year, according to the agreement.

“We can surely pay back the money,” said U Htun Naing.

Last week, the permanent secretary of the MOEE said that the government is planning to buy 1,000 megawatts of electricity from a Chinese state-owned company to solve potential electric shortages over the next two years.

Recently, U Htun Naing said in the Lower House of Parliament (Pyithu Hluttaw) that only 44 percent of people in Myanmar are linked to the national grid.

The country stands at Southeast Asia’s lowest rate of access to electricity.

The MOEE targets for 55 percent of the population to have access to power by 2020-2021, 75 percent by 2025-2026 and 100 percent by 2030-2031.

In October last year, Parliament approved a loan of almost $300 million from the Asian Development Bank (ADB) to upgrade the national power grid in Yangon, Irrawaddy, Bago and Tanintharyi regions and in Mon, Karen and Rakhine states.

The project is expected to increase electricity distribution to 84,850 households in Irrawaddy Region, 151,667 households in Bago Region, 42,747 households in Mon State, 27,820 households in Karen State and 27,820 households in Rakhine State.

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