Despite Opposition, Ministry Says It Will Increase Electricity Prices

By Htet Naing Zaw 26 June 2017

NAYPYIDAW — The Ministry of Electricity and Energy will increase electricity prices soon, said deputy minister Dr. Tun Lwin, citing an annual financial loss of 300 billion kyats concerning the electricity supply.

Pulaw Township lawmaker U Ohn Khin asked during the Lower House parliamentary session on Monday if the government would adjust electricity prices.

The production cost of electricity by state-owned and private power plants is around 92 kyats per unit, but the price sold to users is 69 kyats on average. The government then subsidizes 22 kyats for each unit used, creating a loss of 337 billion kyats during the 2016-17 fiscal year, said the deputy minister.

Because of the subsidies, the government is short of funds to invest in the country’s electricity production facilities for the benefit of national development, said Dr. Tun Lwin. “So, we need to cover those costs,” added the minister.

Lawmaker U Ohn Khin said that residents in Tanintharyi (Tenasserim) Division have to pay 350 to 650 kyats per unit for electricity from private electricity producers, and that they would not use appliances such as refrigerators or washing machines, even if they received them for free.

“They dare not use them due to the high electricity prices. When they buy home appliances, they choose the ones that consume the least electricity,” said U Ohn Khin.

The ministry, he argued, “can’t increase electricity production because of the loss.” Its income would not increase as long as electricity production itself does not increase, he said, adding that the local population is growing. “So we have been in a vicious circle which should be stopped now,” U Ohn Khin said.

Currently, only 38 percent of the country’s population is connected to the national grid, leaving 62 percent of the population without access to government-supplied electricity, said the deputy minister.

“Only when those who have access to [government-supplied] electricity pay reasonable electricity prices will we use the money which we have to annually subsidize the building of new grids,” said Dr. Tun Lwin.

The previous government attempted to increase electricity prices in November 2013, but aborted its plan in the face of strong opposition from the people.

Currently, households pay 35 kyats per unit for up to 100 units, and 40 kyats per unit for up to 200 units. Any units above 200 cost 50 kyats.

Industrial users pay 75 kyats per unit up to 500 units, 100 kyats from 501 to 10,000 units, 125 kyats from 10,001 to 50,000 units, and 150 kyats from 50,001 to 300,000 units. The unit price drops to 100 kyats for usage that rises above 300,000 units.

At present, as the state-run power plants cannot produce additional electricity, and the ministry has to purchase up to 51 percent of country’s total production from private producers. The government has to buy electricity for 68 kyats per unit from private hydropower plants, and for 158 kyats per unit from private gas-fired power plants, according to the deputy minister.

U Htay Aung, a hotelier in Yangon, has complained about the government’s plan to increase electricity prices.

“Things such as electricity and rail transportation are not meant to make profit and it is the responsibility of the government to provide such services. We are hardly making profits, and the price increase will surely become a burden to us,” he told The Irrawaddy.

Last Friday at a meeting between businessmen and military-appointed Vice President U Myint Swe in Yangon, industrialists proposed tripling electricity rates for household use to 150 kyats, and increasing industrial use from 150 kyats to 175 kyats.

The ministry, in cooperation with the World Bank, is designing its tariff policy and held workshops concerning new electricity rates in April and May, attended by parliamentary committees, energy ministers of divisional and state governments, and experts.