In an effort to reduce state spending, the Pyidaungsu Hluttaw last week voted to move forward with a plan to increase the price of electricity as of April 1 for households by as much as 42.8 percent for units used over a certain threshold, parliament announced last week.
Though households will still pay K35 per unit up to 100 units, they will pay K40 per unit up to 200 units, and K50 for any units used above that.
Industrial users will pay K75 per unit up to 500 units, K100 from 501 to 10,000 units, K125 from 10,001 to 50,000 units, and K150 from 50,001 to 300,000 units. Above 300,000 units, the unit price will drop to K100.
Passage of the plan, which has been on the table since November and was delayed in a vote last month, has drawn the ire of the political opposition as well as industrialists who now question whether their businesses will survive.
The law was passed after extensive discussion with MPs concerned that rates should not be increased to the extent they are a burden on low-income users, or a barrier to job opportunities or national and industrial development. They also discussed action against people stealing power, and extending access to regions without electricity.
At current rates, the government loses K284 billion a year, a figure that will fall to K12 billion with the new rates, Minister for Electric Power U Khin Maung Soe told the hluttaw on March 17.
Reducing these losses would enable the government to build the power stations, lines and sub-stations needed to expand electricity supply to some of the 70 pc of households that are currently off the national grid.
Pyidaungsu Hluttaw Speaker Thura U Shwe Mann urged the ministry to extend power access to other regions by reducing the rate of loss to power leakage, which amounts to between 26pc and 39pc.
“The ministry’s total income is K1.853 trillion. If the ministry can eliminate a 30pc power loss, it can recover K618 billion. If it can eliminate just 20pc, it can save K400 billion. That money could be used for development, including raising the wages of its staff,” the speaker said.
The law also faced objections from some National League for Democracy members, who argue that the government should be prepared to provide electricity at a loss because it is a public service.
“What about the Ministry of Defence and the Ministry of Religious Affairs?” National League for Democracy Representative Daw Sandar Min asked. “They never make a profit.”
Raising rates would also raise the price of any goods produced with electricity, she added.
In the new rates the government will cut the cost of electricity for heavy industrial users that consume more than 200,000 units a month, though most mid-sized factories use far less than that amount, Toe Nandar Tin, owner of the Annawa Dewi frozen seafood factory in Yangon Region, told The Myanmar Times.
“A moderate-sized factory, using 30,000 units a month, could end up spending at least 60pc more on power,” she said.
“The new rate will cost much more. I don’t know whether my factory will survive or not, especially as the minimum wage law will raise the cost of labour as well.”
According to figures from the President’s Office, there are 127,000 businesses registered in Myanmar, of which 99pc are SMEs thought to use up to 20,000-30,000 units a month.
Economist U Hla Maung said the government’s rationale for increasing prices was “nonsense”. “Increasing rates will push up the cost of business and impact commodity prices. Everybody and every sector will suffer, and so will poverty reduction measures and the economy in general. The government is talking nonsense,” he said.
He added that instead of raising rates, the government should subsidise the development of industry, to be paid for through future tax collection.
International finance institutions including the World Bank and Asian Development Bank, however, have said in the past that not increasing the prices could stunt economic growth and that consumers would eventually need to pay more.
“Without new funding, the electricity supply will not improve and the shortages which affect Myanmar’s towns and cities presently will get worse,” the World Bank said in a statement in November.
Source: Myanmar Times