ADB Highlights Burma’s Dire Energy System

Published on Sep 28 2012 // article, Featured Analysis, Slide Show

ADB Highlights Burma’s Dire Energy System

 

A gloomy picture of Burma’s electricity system—a key element of the country’s desired development—has been painted by the Asian Development Bank (ADB).

The energy grid is inadequate and failing due to a multitude of problems including poor maintenance, ill-trained staff, an absence of planning and crippling bureaucracy in which eight different government ministries are involved in making decisions.

The ADB says there is an urgent need to streamline responsibility for energy and to draw up medium-to-long term planning strategies.

The already limited power network is so old and poorly maintained that it “suffers from high transmission and distribution losses that need to be addressed urgently,” the ADB says in a draft report on the state of Burma as it prepares to re-engage the country with financial and technical assistance.

The ADB opened in office in Rangoon in August after an absence of 24 years.

“Supply options have to be assessed for power, petroleum, coal and other sources of energy, including investment requirements for meeting growing energy demand,” said the report.

“Despite sitting on huge energy resources [Burma] has one of the lowest commercial per capita consumptions in Southeast Asia. This low energy demand is due to its low per capita income and insufficient energy infrastructure.”

Only 26 percent of Burma’s 60 million people have access to mains electricity and yet the country is “one of the five major energy exporters in the region, particularly natural gas,” said the bank.

The inadequacy of Burma’s electricity supply and distribution as the country starts to expand economically was highlighted in the middle of this year when thousands of people in Rangoon and Mandalay paraded peacefully through the streets at night carrying lit candles.

The ADB report says Burma’s installed electricity generating capacity is higher than previously estimated, at 3,361 megawatts (MW).

A unit of 1 MW in fulltime operation will power around 1,000 homes for one year.

However, Burma’s full generating capacity is never achieved due to a catalogue of technical and other problems. These include natural gas pipelines which feed several power plants being so poorly maintained that insufficient compression reduces efficiency; dilapidated transmission cables and transformers; and reduced power from hydro-electric systems when water levels are low.

Thailand with a similar-sized population has a generating capacity of 26,000 MW reaching into most remote rural areas of the country. Almost 70 percent of that capacity is fuelled by natural gas and around one-third of Thailand’s annual gas demand is imported from Burma.

Around 75 percent of Burma’s overall electricity capacity is generated from hydropower, 21 percent from gas, and four percent from coal.

The hydropower potential from Burma’s rivers is more than 100,000 MW and 92 large scale projects with a total installed capacity of 46,101 MW have been identified, the report said.

Proven gas reserves total 11.8 trillion cubic feet with “huge potential” for more. Burma also has an estimated at 489 million metric tons of coal and produced 692,000 tons in 2011 but, amazingly, over 65 percent of the primary energy consumption in the country comes from biomass fuels such as wood, charcoal and agricultural waste.

The ADB said the Ministry of Energy plans to construct 13 hydropower plants with a total capacity of 2,570 MW by 2020, but many more were planned by foreign investors. Four coal-fuelled and one gas-fuelled plant are planned in the next two years in the greater Rangoon region with a total of around 2,200 MW of capacity.

South Korean and Japanese companies are reportedly involved in these.

“A 600 MW coal-fired plant is going to cost at least US $700 million and most probably more like $850 million if it has best-case anti-pollution technology,” Bangkok-based energy industries analyst Collin Reynolds told The Irrawaddy on Monday. “The cost will be higher for a similar-sized gas-fired plant.

“Gas would seem to be Burma’s best longer-term energy source for power generation and in the short term coal systems would be quicker and avoid the need for new gas pipeline infrastructure,” he added.

“Hydrodam systems are costly, have slower development time frames and their delivery capacity will be seasonal and affected by climate. To Burma’s north in China’s Yunnan there have been long periods of power shortages caused by drought bringing hydroplants to a standstill.”

The ADB is recommending that the Burmese government should “review” the pricing structures for electricity and fuel oils and consider privatising eight state-owned energy enterprises.

The assessment of Burma’s energy problems and possible solutions is part of a wide-ranging study carried out by the ADB since early this year in preparation for what it terms a fully-fledged country partnership strategy for development.

The report also assessed transport, water supply, poverty levels, environment, regional integration, economic reform and education.

However, the ADB underlines its insistence that before any grant-based technical and other assistance can be provided there must be a settlement of debts still owed to the bank by Burma.

“The ADB is working with the [Burmese] authorities and other creditors on the arrears clearance as part of an international multi-party effort to assist [Burma] to regain access to international financial resources”—basically in order to benefit from all ADB programs, ranging from public and private sector financing and planning to environmentally sustainable rural development and tackling HIV/AIDS.

Burma owes the ADB $500 million dating back to 1988 when the military regime stopped debt repayments.

Irrawaddy