Guest Column

Burma’s Looming Power Struggles

By Khine Win 26 May 2015

Local protests against coal-fired power plant projects are occurring across Burma, at the same time as the country faces constant electricity shortages. Blackouts are commonplace in urban areas, especially in the dry season, and power fluctuations regularly cause damage to electrical appliances. With only 30 percent of households connected to the main grid, Burma has one of the lowest electrification rates in the region, comparable only to Nepal. Without addressing these shortfalls, there is no way Burma can become a modern, developed and industrialized country.

The administration of President Thein Sein administration is aware of this challenge. Since he came to power, assistance has been requested from international donors and a number of reforms in the electricity sector have been initiated, including the introduction of private producers into the market and the corporatization of the Yangon Electricity Supply Board (YESB). As a result, electricity output has grown on average 15 percent per year since 2011. The World Bank, Asian Development Bank and Japan International Cooperation Agency (JICA) are now providing technical and financial assistance to Ministry of Electric Power.

According to a KPMG report into electricity infrastructure in Burma, electricity generation alone will need an investment of roughly US$50 billion to meet demand. If investment in transmission and connections is also considered, the total funding needs of the electricity sector are between US$70-80 billion. Clearly, the government does not have sufficient investment capacity to fulfill the country’s demand for power, and private producers will need to play an important role in meeting the country’s growing electricity needs.

Coal-fired power generation is a relatively cheap and expedient means of increasing large-scale power supply in Burma. So why are there protests against coal-fired power projects when most of Burma’s rural population is off the grid, living in darkness? In short, the lack of community support for the projects arises from the poor regulatory abilities of state institutions and a pervasive distrust in the government.

Foreign investors are bringing key stakeholders from project areas to Japan and Thailand in an attempt to demonstrate that coal power plants will not have any social or environmental impact on people in project areas. They are promising that they will abide by the international environmental and health standards, but the people living near project sites are not convinced. They believe once they accept the projects, investors will violate the standards prescribed in the contracts in collusion with regulatory authorities. Many believe, not always without reason, that power concessions are given to cronies who then form joint ventures with foreign investors. Others wonder about the true benefit of the projects, given that many have also been contracted to provide power supply across the border to Thailand.

At the moment, there is no independent regulatory body for the electricity sector, and the Ministry of Electric Power will serve as an interim regulator of the electricity market. Anecdotal evidence indicates that senior officials from the ministry, after retiring join private power companies owned by cronies, leading to a concerns among the public of regulatory capture by vested interests.

Local protests against coal-fired power projects are unlikely to subside in the near future. In a recent parliamentary session, the deputy minister of electric power said these projects could not be canceled because the modernization of the country depended on more power generation. He also said that many of the projects would reinvest money into their communities, noting that two percent of gross profits from these plants would be used to set up funds for conservation and economic development.

With a lingering trust deficit between the public and the government, a lack of regulatory rigor and persistent questions about the worth of these power projects from the communities that will host them, it beggars belief that such a meager offering will mollify local critics.

Khine Win is director of the Sandhi Governance Institute, which focuses on promoting good governance in Burma.