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Myanmar’s electricity goals depend on ODA

With 5.5 percent annual growth of gross domestic product, Myanmar was one of the fastest growing countries in ASEAN during 2011-2015. The growth of Myanmar’s economy is heavily influenced by the government’s focus on promoting special economic zones among investors.Subject to the implementation of this focus, infrastructure development in energy is vitally important to make the country more attractive to investors.

Myanmar had an electrification rate of 33pc in 2017 and requires more energy infrastructure development, which has been the backbone of economic growth for the past five years.

Myanmar’s National Electrification Plan aims to electrify 100pc of households by 2030, with intervening targets of 47pc by 2020 and 76pc by 2025. In the past seven years, the compounded annual growth rate of Myanmar’s electricity demand was 13.1pc, which is projected to continue at the same pace up to 2030, according to the government. More than 35 million people still have no access to the power grid, and the government is racing against time to achieve its electrification target.

Myanmar will require a total investment of US$5.8 billion (K7.74 trillion) for this project. To reach the government electrification programme’s 2020 target, about $650 million in loans and $24 million in technical assistance will be required during 2015-2019 for implementation of grid-connected power plants and mini-grid/off-grid establishment. Indeed, the government seeks to get as much Official Development Assistance (ODA) as it can for energy development.

Such assistance from developed countries is intended to promote the economic development and welfare of developing countries. For decades, ODA has been considered an important tool to support the growth of developing nations, including Myanmar.

Based on a study by the ASEAN Centre for Energy and Korean Energy Economics Institute, ODA in energy has grown by 36.4pc a year in Myanmar, reaching $2.66 billion in 2016. Until 2015, Japanese ODA dominated Myanmar’s power sector. However, China has since supplied Myanmar with $2.3 billion, or about 75pc of total assistance for Myanmar’s oil and gas infrastructure. China’s contribution overshadowed Japan’s $718.6 million and other ODA, such as from the World Bank and Asian Development Bank, which together provided $235.7 million.

The World Bank and other donors plan to limit ODA to Indonesia and Vietnam. As a result, Myanmar will be replacing those countries as an ODA recipient in energy development.

Based on Myanmar’s Energy Master Plan, power and rural electrification will be the government’s priorities in future ODA projects. For transmission infrastructure, the potential investment in Myanmar will be around $2.4 billion up to 2020 and an additional $3.4 billion up to 2030, most probably under ODA projects.

In capacity building under the Ministry of Electricity and Energy, the absence of strong policies on human resources will be one of the areas targeted by ODA donors, as they are believed to be critical to achieving the 2030 electrification target.

To gain more ODA, the government needs to establish better communications with donors. Also, it is important for Myanmar to improve its ODA policy and adopt the practices of other countries, such as Indonesia and Vietnam, which translated their national long-term and medium-term projects into ODA projects.

This could help Myanmar gain donor confidence and support its target of 100pc electrification by 2030.

Aloysius Damar Pranadi is a technical officer in policy research and analytics at the ASEAN Centre for Energy.

Source: Myanmar Times

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