Myanmar betting on hydro to solve its energy crisis

Myanmar has announced it will embark on the construction of hydro-electric facilities in order to solve its energy woes, move away from coal, and attract foreign investment.

Myanmar, formerly known as Burma and Asia's sixth-poorest country, suffers regular blackouts in its major cities and half of its population are left without access to electricity altogether.

Attracting foreign investment for new coal-fired power plants has proven difficult due to environmental concerns.

The new democratically elected government of Aung San Suu Kyi, which first convened earlier this year, is looking to boost job creation in the country but poor quality infrastructure makes this difficult.

Myanmar's initial plan was to boost coal's share to a third by the end of the next decade from just three per cent now and to slash the contribution of hydro to 38 per cent from 63 per cent.

But most people are “reluctant to implement coal-fired power plants, that's why we won't be able to implement the planned coal power plant projects," said Aung Ko Ko, director of hydro and renewable energy planning branch at the Ministry of Electricity and Energy.

"Hopefully hydropower will be the majority in the new plan," he said, estimating its share at 50-55 per cent by 2030-31. Imports of liquefied natural gas (LNG) could make up for some of the drop in coal use, Aung Ko Ko added.

Nine key ministries, including energy, industry and mining, have met in the capital Naypyitaw to coordinate their energy strategy with the aim to have a draft master plan ready by the end of the month, and under scrutiny are 49 hydropower projects approved by the previous government.

Myanmar is reviewing these to see whether they can be completed and how quickly if so.

It is also considering how many more would be needed and how to secure funds, as it seeks to boost its power capacity to make the most of an unprecedented economic revival after 49 years of military rule that ended in 2011 and to sustain an economic growth rate of about eight per cent that is one of the world's fastest.

"The new government realizes these projects should be prioritised. She [Suu Kyi] allowed us to talk with potential international lending facilities like the ADB," a senior official at the department of hydropower implementation of the Ministry of Electricity and Energy said, referring to the Japan and US-led Asia Development Bank.

Several dams and power plants in Myanmar have until 2011 been financed by China and, while the West has since shown eagerness to provide financing for electricity projects in the country in a bid to increase its influence there, experts say shifting away from Beijing will not be easy.

Of the projects under review, some 31 include Chinese investment and involve 11 Chinese companies. It lists names such as Beijing-based conglomerate Hanergy Holding Group and state-owned CPI Yunnan International Power Investment Co which is behind the controversial $3.6bn (£2.7bn) Myitsone megadam project.

The 2011 cancellation of the Myitsone remains a sore point between the two countries. Myanmar suspended the project citing environmental worries, but the decision was also seen as an attempt to distance itself from Beijing, an uncertainty that has stymied subsequent investment decisions.

China has been asking to restart Myitsone, and finding a solution is crucial for Suu Kyi as she needs China's help in talks with ethnic minority armed groups, many of whom operate on the border between the two countries. A resolution could also help unlock more Chinese funds.

"In my opinion, the developers of these projects (on the list) cannot get loans from Chinese banks because of the problems with Myitsone," said the energy ministry official at the department of hydropower implementation.

Five projects on the list that are sponsored from Myanmar's budget have faced delays because the country does not have enough money to finance them, the official said. Seven others are being built by local firms. The rest will need to be financed in cooperation with foreign investors.

Power consumption in Myanmar is among the lowest in the world. Its per capita use averaged 164 kWh in 2013 according to the World Bank, the 11th lowest in the world and roughly on a par with Sudan and Togo.

In 2013, Malaysian companies Mudajaya Group and IJM Corp announced they would invest £750m to build two new power plants in the country aiming to complete them by 2016. However, as of April 2016 there had been no news since the announcement, and the project appears to be deferred or abandoned.

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