AS THE GOVERNMENT subsidy in the electricity sector amounted to Ks470 billion (Bt12.2 billion) last year, Myanmar plans to draw an effective action plan to undertake electricity reforms urgently.
In a bid to seek advice from different stakeholders, the Stakeholders’ Forum on Electricity and Energy was held at the office of Union of Myanmar Federation of Chamber of Commerce and Industry last week.
At the event, Tun Naing, deputy minister for Ministry of Electricity and Energy, said that Myanmar should urgently find the best way to reduce the government subsidy in the electricity sector so the whole population will have access to electricity by 2030.
He said that only 35 per cent of the population have access to electricity. He said the government is facing a lot of challenges to undertake national grid expansion and building transmission and distribution lines for the remaining 65 per cent of the population who do not have access to electricity, due to the large amount of the subsidy.
“Now we collect Ks35-50 per unit [of electricity] for household use while we charge Ks75-150 per unit for industrial use, depending on their usage. But each unit costs Ks68 if we generate electricity from hydro stations while it costs around Ks150 if we generate power from natural gas,” he said.
“We also generate power by other means, so costs are different. On average, production of each unit costs Ks92 but we receive only Ks69 from average sale of per unit. So, the government has to subsidise Ks23 for sale of every single unit.
“Those who have access to electricity here pay much less than the actual cost for their use. Meanwhile, people from unconnected areas also have to pay the same taxes as those who are already connected. If we favour 35 per cent of the connected population, it seems unfair to the remaining 65 per cent who are yet to have access to electricity. So, we need to decide whether we should favour the minority or do it for the good of the majority.”
Tun Naing said that those who have access to electricity need to have the courage to pay for the actual cost of power they use to ensure they do not block the development of unconnected people. He said Myanmar’s inclusive growth depends entirely on national electrification.
The deputy minister’s view is contradictory to what a regional authority denied about widely spread rumours on potential electricity price hike at the same event. Nilar Kyaw, minister for industry, electricity and transportation of Yangon region government, said that there is no plan to increase electricity price yet.
“We recently received a lot of queries on the news of increasing electricity price threefold,” she said. “Increasing collected price for electricity is not as easy as expected. We need to take all the sides and economic situation of the people into consideration.
“We need to calculate well, based on sound reasons and accurate figures. Our [Yangon] prime minister did not say like that. We do not know who made the rumours spread but it is groundless.”
Yet, Nilar Kyaw also highlighted that the government subsidy in the energy sector is too much. She expected the government could subsidise around Ks900 billion if it supplies 24-hour reliable power to all the connected areas in 2017-18.
She hinted that there could be electricity blackouts in Yangon in the hot season that would starts next month. She said that in reality, it is really hard to fulfil the growing demand, although power generation yearly increases.
The city’s power demand increases 15 per cent on a yearly basis, according to the Yangon Electricity Supply Corporation.
According to Tun Naing, Myanmar needs to invest equally in three important pillars – production, transmission and distribution. He said expansion and maintenance of transmission lines and the distribution network is as important as building new power plants.
“It is like preparing for dining. Giving someone a plate is not enough. We also need to have rice and a pot,” he said.
He said that as the nation’s power demand surged by more than 200 per cent over the past five years, the nation needs to increase its production at least 500 megawatts per year. Meanwhile, Myanmar needs to reduce transmission and distribution losses by using the latest technology. He projected the nation would need a minimum 4,531MW in 2020-21.
In a bid to improve power production, the government has corporatised power production since 2008. In 2009-10, independent power producers (IPPs) held only 23.55 per cent of the production. But now IPPs hold 48.4 per cent of power generation in Myanmar, while the government holds 51.6 per cent.