Darkness will continue to fall: Myanmar’s intractable electricity crisis

Just before the National League for Democracy party came to power in Myanmar in 2016, a World Bank policy brief, titled “Energizing Myanmar”, highlighted the woeful deficiencies of the country’s electrical power infrastructure. Two-thirds of Myanmar’s population was unconnected to the national grid at the time, and 84 percent of rural households lacked access to electricity. The brief estimated that US $2 billion would be needed to connect 500,000 households to the grid each year, based on projections of 7.1-percent annual GDP growth. The formidable challenges and enormous quantities of capital needed to implement a national electrification plan in Myanmar were obvious from the first. It would be necessary to mobilise public, private, and official development financing simultaneously as well as marshal the human resources needed to meet the target of universal electrification by 2030. Despite these challenges, according to a more recent energy sector report released by the World Bank in June 2024 (titled “Energy Poverty Amid Plenty”), Myanmar’s electricity infrastructure stayed on a steady development pathway between 2015 and 2021. However, the same update stated that in Myanmar, “the operational capacity in 2024 is as low as it was in 2015, meaning years of progress has effectively been undone”. After electricity has come to play an essential role in the daily lives of every household and business in Myanmar’s new, 21st-century economy, this amounts to nothing less than a devastating reversal of fortune for the nation as a whole. Power outage in Yangon Can the junta revive the electricity sector? At the 29th China Kunming Import and Export Fair—held in China’s Yunnan Province last month—Adm. Tin Aung San, the chair of the junta-controlled Myanmar Electricity and Energy Commission, met with officials from two Chinese state-owned power companies. Both the Union Resource and Engineering (UREC) and the State Power Investment Corporation’s (SPIC) subsidiary SPIC Yunnan International (SPICYN) are major investors in hydroelectric and gas-fired power plant projects in Myanmar, but whether the planned projects can be implemented on schedule is unclear. In truth, with work delayed on the Myitsone project, backed by SPIC, and the Mee Ling Gyaing project, backed by UREC, the junta’s prospects for addressing Myanmar’s energy sector woes seem dimmer than ever, for three main reasons. First and foremost, the electrical energy sector functions as a bundle of three parts—electricity generation, transmission, and distribution—all three of which must be harmoniously aligned to provide a reliable supply of electricity to a national population. The ongoing power plant projects—all of which relate to power generation—are in northern and northeast Myanmar. To allow the power generated in these areas to reach the rest of the country, there must be transmission lines to existing grids that will cost billions in addition to what has already been invested in the projects. Without these transmission lines, 90 percent of the electricity generated from the proposed Myitsone dam project will go to Yunnan Province across the border, and not to the Myanmar heartland. For liquefied natural gas (LNG) and gas-fired power plant projects, issues include where to get a reliable supply of fuel—whether to import it or source it by pipeline from gas fields and regasification stations inside the country—and the fluctuating prices of gas and LNG. The withdrawal of the Hong Kong-based VPower company from Yangon underscored the latter issue, with the rising price of LNG, depreciation of the kyat, and scarce dollar reserves all serving as factors in the firm’s decision to exit Myanmar. The problem of where to source gas is also critical. According to the World Bank’s 2024 update report, cited above, declining gas production forced the regime to ration supplies of gas to publicly owned power plants, leaving them practically idle. Pipeline corrosion has also limited the supply of gas to power plants in Yangon from the Yadana gas fields in Tanintharyi Region, with information from some reports indicating an entirely new pipeline is needed. Chanayethazan Township, Mandalay during a blackout in May 2023 (Supplied) The second major obstacle to resolving the energy sector’s problems is the bankability of these multibillion-dollar investment projects. The tariff rates charged to end users in Myanmar’s factories, businesses, and households will be crucial in determining their success, and at present Myanmar’s power sector is accruing losses in the hundreds of millions of dollars. The losses amounted to $400 million in 2019. The falling value of the kyat since the 2021 coup has aggravated the problem. The tariffs rates are simply too low to allow for cost recovery, although successive governments, including the NLD in 2019, have tried to implement tariff reform. These rates are the primary hindrance to private investment. Investors are aware that the more they produce—and the greater amount of electricity households, factories and businesses consume—the more the losses borne by Myanmar’s Ministry of Energy will increase, potentially leading to public default or failure to abide by take-or-pay agreements with independent power producers. However, raising the rates would only be feasible in a country where economic development is progressing and household incomes are on the rise, and Myanmar’s economy is deteriorating, with more than one-third of the population in need of humanitarian assistance. A final reason the junta may never find a solution to the energy crisis is the complexity of the power sector’s structure, which necessitates the capacity to plan efficiently and effectively. The regime must figure such varying factors as population size, the rate of economic growth, and the nature of industries and business into its decisions about how to align the three bundled parts of energy production. Any multi-year planning of large projects should also allow for a better mix of hydro, gas, solar, and wind generation. However, as noted in the World Bank’s 2019 policy brief, time and cost overruns are typical features of planning in the power sector. While facing these three main obstacles, the junta must also contend with the basic reality that political stability and peace are necessary conditions for attracting billions of dollars in investments. The reluctance to invest in Myanmar, even by Chinese investors seeking to profit from development projects throughout Asia, is understandable amid the country’s ongoing, multifront civil war. This is why, as the World Bank’s updated report noted in 2024, the power sector’s challenges are structural, fundamental, and inextricably tied up with Myanmar’s current instability, conflict, and macroeconomic woes. There would be no easy remedies to such challenges even in a stable, well-governed country, and may prove practically impossible for the ruling military regime to resolve.

Darkness will continue to fall: Myanmar’s intractable electricity crisis

While Myanmar has abundant energy resources, it is the most energy-poor country among its neighbours and ranks near the bottom globally in terms of per capita electricity consumption

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