Myanmar is a huge energy hub in the Asian continent. It is among the largest exporters of energy in the world. Its primary energy sources are coal, oil, gas, hydropower and biomass. Myanmar has a very desirable location for energy supply to the south-east economies. It enjoys a strategically advantageous location within the ASEAN community, acting as a regional connector of East Asia, South-east Asia and South Asia. Moreover, it acts as the only land bridge between two major economies- China and India. Myanmar is blessed with a huge potential for it’s tapping of energy resources. In fact, it was one of first economies to export oil (1850s). Because of its extremely important strategic location in the world, it is very important for the economy to develop fully. One of the main sectors, it needs to work upon is the energy sector.
Recent opening up of economy in energy reserves: Myanmar faced years of isolation and political conflicts which hindered the energy hub to exploit its resources fully. As Myanmar began to open up its economy since 2011, it started working on economic development with prime focus on its energy sector which had a massive share in the government budget.
The nation’s current demand scenario is expected to double from the current rates by 2025. Myanmar needs to install a capacity of 23,594 MW of energy by 2030 if it wants to meet its goal of 100% electrification of the area. Surprisingly, the country’s current capacity is a meagre 4987MW. Moreover, the country majorly exports its production to other countries. A Myanmar Times Report projects its current oil consumption to double to 42,000 barrels per day by 2025.
Myanmar, which was already anticipated as a favorable spot for investment, has experienced huge foreign involvement in its energy sector. Off-shore oil and gas exploration projects have already begun with foreign participation.
Energy resources currently present: Nearly one-third of the total energy generation comes from gas-fired power plants with hydro contributing the maximum share. The country possesses a total of 13 state owned and private-run gas-fired plants although they are facing fuel shortages currently. About 210 million cubic feet of natural gas is produced for Yangon (Myanmar’s largest city) alone. Myanmar currently produces 2 billion cubic feet of natural gas per day but most of them are exported to China and Thailand. However, with the decline in off-shore oil production, Myanmar is looking for alternatives to meet the growing energy demands. The country is planning to import LNG from various countries in order to meet the short-term energy needs. MOUs have been signed between the energy ministries of Myanmar and Thailand in order to enhance the energy cooperation between the two countries including cross-border pipelines and LNG (Liquefied Natural Gas) import processes. Companies from countries like China, Korea, Japan, Norway, Singapore and Thailand have proposed projects for investing in LNG development in Myanmar. Potential areas for LNG facilities are Yangon, Pathein, Dawei and Kyaukpyu in Rakhine State.
In fact, the China National Petroleum Corporation has proposed the development of a terminal in Kyaukphyu to receive imported LNG and to transmit it through the pipeline. The operations have already begun in late 2013. It is designed to transmit 12 billion cubic metres of natural gas per year from the Shwe natural gas field, although currently only around 400 million cubic feet per day (mmcfd) is exported to China.- (The Myanmar Times, 26th May 2015)
If Myanmar manages to secure LNG, then it would solve the supply issues greatly. Apart from this, major energy projects have already initiated. Myanmar has attracted many major international firms like Statoil, Shell, Total, Chevron etc. Florida-based company APR energy has accepted the contract to supply power to meet the growing energy-appetite of the population. The country currently possesses 10 gas fired projects (834MW) and only one coal- fired power plant. A Singaporean firm Sembcorp Industries has proposed to develop 225MW gas-fired plant in Myingyan near Mandalay. A firm from Japan Marubeni Corporation will seek to develop a 400MW plant in Thanlyin near Yangon. The Japan Gasoline Corporation and Sumitomo Mitsui Banking Corporation are in talks to develop a Floating Storage and Regasification Unit(FSRU) offshore, about 80 km from Yangon. The project if initiated would power the Thilawa Special Economic Zone which would become the nation’s first SEZ. However, the project is currently facing financial issues as its initial cost is estimated at $500 million and an additional operating cost of $25 million per year.
However, like all sectors, the energy sector is not free from challenges. Since its end to military rule, the development in Myanmar was in a state of slowdown where the economy neither signed any major production projects for off-shore exploration nor carried out any production in the gas fields. Moreover, the fast pace exploration by foreign investors in off-shore and on-shore gas production brings out great trouble to the small number of government officials who are finding it extremely difficult to handle many complex projects at the same time. In addition to this, the government lacks sufficient information on potential reserves in the areas. And finally, despite its slow growth in the energy sector, the energy demand is continuously rising at an alarming rate and the production in the areas is unable to meet its growing demand. The country exports a major portion of its energy production to other countries even though nearly 70% of the economy (particularly the rural sector) does not have access to basic electricity facility. As per the World Bank records, among all the ASEAN members, Myanmar has the highest percentage of population without access to electricity. The country’s dependence on hydropower poses a great challenge during the dry season when a major proportion of power is substantially reduced. During the dry season, the hydro-sector produces just 20-30% of the installed capacity due to lack of water and limited reservoir size. In addition to this, the technology used in gas fired projects is highly inefficient and obsolete where nearly 44% of its total capacity is not available. One of the major challenges is the government facing financial issues as it does not have sufficient funds to develop infrastructure which is a key to overall development of the energy sector. Although government-to-government financing is meeting economy’s short term needs but the economy needs to work in its finance sector before the situation worsens.
The proceedings of Myanmar Green Energy Summit 2015 revealed that the official electrification rate in Myanmar is 13% whereas a majority of households (95%) depend on traditional methods of using sold fuels like rice husk and wood for heating and cooking. Mere 7% of the rural population of the access to electricity and most parts of the country are deprived of the fossil power generation. Thus, the need to tap the unrealized renewable energy becomes of utmost importance to meet the problems of energy access and energy poverty in the country.
Myanmar is endowed with a vast potential for renewable energy projects.Many solar and biomass projects have been identified throughout the country but there is lack of government’s efforts to exploit these resources. Myanmar’s geography is such which makes it suitable for exploitation of solar, hydro, wind and biomass energy. Myanmar draws its major electricity from hydropower (2780 MW). There is about 2000MW hydro energy projects under construction like Upper Paung Laung (140 MW), Thauk Ye Khat (120MW), Baluchang (52MW) and the recent one Upper Yeywa (280MW). Apart from this, 32 small hydro projects have already developed with a capacity of 36MW each. However, the total installed capacity is far from its actual potential. Myanmar has a hydro energy of around 100,000MW capacity which if fully utilized could meet the energy requirements of the entire Asian continent
However, presently, renewable energy like Solar and wind projects are in very initial stages of development. The world’s leading power and automation technology group ABB and an international NGO PACT have entered into a partnership to bring solar energy to rural population of Myanmar. It aims to increase economic opportunities and improve quality in rural areas. Apart from this, Green Earth Power (Thailand), a renewable energy powerhouse and ACO investment group are in talks with Myanmar government o develop solar plants of 100MW capacity in Yangon.
The country has a huge forest cover which carries a great potential for exploitation of energy from biomass. However, there is a problem with this regard also. Large dense forests lie majorly in the northern part of the country which is beyond reach for a villager or any other normal person. Apart from this, a majority of the population lack knowledge to tap this resource. Here, government needs to step in to encourage energy production in this respect.
And finally there are many projects being initiated which can meet the energy needs in the future. These projects hope to improve the power sector in the near future. Many projects are currently under development in Myanmar. A 120MW project by Tokyo Thai is currently the most progressed project with international sponsors. Another project in the pipeline is the 500 MW gas-fired power project in Thakayta province. India’s most valuable firm, Reliance India Ltd. signed a Production Sharing Contract (PSC) with Myanmar’s Myanmar Oil and Gas enterprise in 2015 for two off-shore blocks. Another agreement is signed with the US-based ACO Investment Group to develop two 15 MW solar energy plants worth $480million which could benefit the rural population immensely. This project when constructed will contribute nearly 12% to Myanmar’s power sector. In 2013, an agreement between Myanmar and Philippines on the lines of use of renewable energy wherein the two countries proposed to exchange technical expertise, joint research and developmental activities in this field
The government is also participative in enhancing the energy sector of the economy. Apart from undertaking various projects, the government is also working on the legality aspect of the sector which can strengthen the very base of the sector in the near future. Myanmar is working on its new Electricity bill with the assistance of the Asian Development Bank.The new law aims to increase foreign and domestic investments in power projects in Myanmar.
Conclusion: Energy is a thrust area for social and economic development. Myanmar is endowed with huge energy potential and the government should invest immensely in this sector. The key areas the government should focus on to ensure the economic development of Myanmar is: electricity accessibility and pricing, interests of independent power producers (IPPs) and the nascent oil and gas production. As per ASEAN 2030 study, Myanmar has a huge potential to be the food basket and energy source for the entire Asian continent. To achieve this forecast, the economy needs to work upon its weaknesses like electrification of its regions, making Myanmar highly investment friendly, maintaining a balance between economic growth and environment sustainability and working on the basic infrastructure of the areas to make it more investment friendly. Myanmar also needs to work on reducing the costs of production of energy which will attract investment in this sector. The country has a long way to go to meet its ultimate goal of economic development. The government is already functioning well but a little more effort on their part can do a great deal in the overall development of the power sector and therefore the economy.