Tuesday, September 22, 2015

Power shortages to persist as government works toward universal electrification goal

The electricity shortage is likely to persist for years to come, though the government is still working toward a goal of 100 percent electrification by 2030.

Myanmar has an electrification rate of about 30pc, one of the lowest rates in Southeast Asia. The government has developed an array to strategies and plans to improve electricity generation with significant international help, though the goal is ambitious and the country may fall short of target.

Attracting international investors will be important to improving electrification rates, senior officials said.

“Electricity is a crucial need for infrastructure, along with education and health,” said U Zay Yar Aung, Union minister of energy and telecoms, and chair of the Myanmar Investment Commission. “As such, we’re trying to the best of our ability to improve the performance of the electricity sector.”

U Zay Yar Aung said at the Euromoney Myanmar Global Investment Forum on September 15 that there are 17 power plants due for completion next year. Another 10 were completed between 2013 and 2014, and there are plans to add another 87 plants that can supply 54,608 megawatts over the long term.

The government has made a pitch for more international investors, and institutions such as the World Bank and Asian Development Bank have contributed loans and advice. However, adding projects has been slowed by regulatory issues and public opposition to some projects, particularly coal power.

The natural gas supply is another major hurdles to generating more electricity. While Myanmar has an abundant supply, most capacity is currently contracted out.

“We are now exporting about 1.7 billion cubic feet per day of natural gas, and delivering around 400 million cubic feet for domestic use. We have to deliver according to demand, and we have to follow the contracts – that’s the situation,” said U Myo Myint Oo, managing director of Myanma Oil and Gas Enterprise, in a plenary session at the conference.

With much of the domestic production contracted out, it is likely Myanmar will become an importer of natural gas to meet domestic demand, even as exports continue to flow.

There are currently four offshore gas projects in production – Yadana, Shwe, Zawtika and Yetagun. The next project to come online could be in M-3 in the Mottama offshore area. Thai state energy firm PTTEP announced a discovery on M-3 in 2013, yet it is possible that commercial production will not begin until beyond 2020.

“M-3 is in the appraisal stage. We need more drilling wells to develop,” said U Myo Myint Oo. “At the end of the year, we are going to know the size of the M-3 gas reserve.”

Many of the power projects planned for the country – such as large-scale hydro and coal projects – take time to be approved. Natural gas is one alternative, but is often poorly used.
“We could think about how to use gas more efficiently and more effectively for power generation. For example, our neighbours like Thailand and Philippines are generating more power from the same amount of gas compared to us,” said Daw Hnin Phyu Phyu Aung, managing director of Lion Energy General Services.

The government’s plan currently calls for coal and renewable to make up a bigger share of the power generation mix over time, and hydro and gas to make up less.

Information previously provided to The Myanmar Times by the Ministry of Electric Power states that in 2020, 54pc of power will come from hydro, 22pc from gas, 22pc from coal and 2pc from renewable. By 2030, 38pc is to come from hydro, 20pc from gas, 33pc from coal and 9pc from renewable, with total installed capacity of 23,594 megawatts.
Coal and hydro generation in particular has drawn opposition from public and non-government groups.

The government has also looked at ways to improve natural gas use. Royal Dutch Shell signed a joint development agreed in August with LNG Plus and Italian-Thai development to build a liquefied natural gas receiving and re-gasification terminal at Dawei special economic zone.

The terminal is to initially be used to power on-sight generation, though later the gas could be distributed further afield. Liquefied natural gas is natural gas that has been condensed by cooling it to at least -162 degrees Celsius (-260 Farenheit), which reduces its volume to about 1/600th the size.