Planned Electricity Price Increase Sparks Concern Among Businesses

By San Yamin Aung 1 November 2013

RANGOON — Business owners and households say they are concerned about the government’s plan to raise electricity prices next month, when rates are set to significantly increase, in some cases with up to 100 percent.

On Tuesday, the Yangon City Electricity Supply Board (YESB) announced that households that consume more than 101 units of electricity per month will have to pay 50 kyat (US $0.05) per unit, a price increase of about 40 percent.

Businesses that consume between 1 to 5,000 units of electricity per month will experience a 35-percent increase and pay 100 kyat per unit starting November, YESB announced. Companies using more than 5,000 units will see their electricity bills double as rates jump from 75 kyat to 150 kyat per unit.

YESB said in its announcement that it was implementing the price hikes “In order to cover costs of producing and purchasing electricity.” The board could not be reached for further comment on the reasons for the plans.

Several factory owners said the price increases would impact the cost of their business operations and some warned this could result in higher product prices for consumers.

“Businessmen who operate freezers, such as ice production, fish and meat production, are saying that they won’t have any profits left if their electricity bill doubles, as most of their input costs come from power,” said Kyaw Soe Tun, secretary of Hlaing Tharyar 5 Industrial Zone Management Committee.

Factories producing plastic, he said, “are waiting to set their market prices to see how they can cover the electricity bills that will come next month.”

Kyaw Soe Tun said the rise in electricity prices further complicates Rangoon’s inadequate power supply situation, which is already marred by frequent power cuts.

“The most important thing is to get full-time power supply,” he said. “In recent days, the government power supply is really poor so we couldn’t even run some operations.”

Daw Toe Nandar Tin, treasurer of the Myanmar Fisheries Federation Products Processors and Exporters Association, said the association’s factories—which use 24-hour cooling equipment to keep products fresh—would experience a sharp rise in cost due to the planned prices hikes, something many factories could not afford.

“I think many industries will stop running their business,” she said. “In Burma, where industries are not growing fast enough, this [cost increase] can be a shock to the country. I’m sure that all will face trouble because of this.”

Daw Toe Nandar Tin warned that the electricity price increase would translate into higher consumer prices for fresh products that need to be cooled, such as meat and fish.

Tun Kyaw, managing director of Step Clothes, said the garment factories would be less affected by the rise in power costs. “The electricity bill is only 5 percent to 10 percent of production cost in the clothing industry, since the salaries of staff are the main cost in my business,” he said. “So, because of that, clothes prices won’t increase.”

Ordinary households are also growing concerned over the planned electricity price increase.

“It is really shocking news for us. In my home, we use at least 200 units per month and I paid over 7,000 kyat [about $7] per month for the electricity bill. But starting from this month, I need to pay over 10,000 kyat,” said Khin Khin Myint, a resident of Rangoon’s Sanchaung Township. She added that her family now planned to reduce their electricity consumption.