Parliament Approves $300M ADB Loan to Upgrade Power Grid

By Nan Lwin 19 September 2018

YANGON — Parliament today approved a nearly $300 million loan from the Asian Development Bank (ADB) to upgrade the national power grid in seven states and regions.

Of the 505 lawmakers in attendance, 501 voted in favor, two voted against and two abstained.

Minister of Electricity and Energy U Tun Naing told lawmakers that the loan would be used to improve the national grid in Yangon, Irrawaddy, Bago and Tanintharyi regions and in Mon, Karen and Rakhine states. Work is scheduled to begin in 2019 and finish in 2025.

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.

President U Win Myint asked Parliament to approve the loan last week.

Of the project’s total $308.9 million cost, the ADB loan will cover $298.9 million and the government will make up the rest.

The ADB component will be divided into $143.1 million for transmission, $98.9 million for distribution, $10.5 million for consultants, $38.6 million for contingencies and $7.8 million for interest payments.

While debating the proposal in Parliament, some lawmakers raised alarm over the size of the consultant fees, which amount to 3.5 percent of the loan.

U Tun Naing told lawmakers that the fees were estimated to cover the full six years of the project, as required by the ADB.

The $10 million to be covered by the government will pay for project management and compensation for expropriated land and lost crops.

U Tun Naing said the ministry and ADB held three consultations in areas to be affected by the project and that local authorities, environmentalists and other experts were invited. He said a joint team had also conducted environmental and social impact assessments.

Some lawmakers were concerned about the debt burden, but Deputy Minister for Planning and Finance U Maung Maung Win said Myanmar’s foreign debt was about $10.2 billion and that the addition of the ADB loan was bearable.

The 32-year term of the loan includes a 24-year repayment period and an eight-year grace period. It will have a 1.5 percent interest rate during repayment and 1 percent during grace.

A recent survey found that Myanmar’s population has the least access to electricity in Southeast Asia.

According to the Electricity and Energy Ministry, only 41 percent of the country’s population was connected to the national grid in 2017. The government aims to have 55 percent of the population connected by 2021.