According to studies, Myanmar has an estimated 40,000 MW of exploitable hydropower potential. However, nearly 75% of the population does not have access to regular electrical supply since the country heavily exports the supply to its neighboring countries. There have been 20 hydropower projects operating in Myanmar with a capacity greater than 5 MW, 17 of which are owned by the Government, 1 is locally owned, and 2 are joint ventures between the Myanmar Government and Chinese state-owned enterprises. Myanmar Government makes Memorandum of Understanding (MOU) with other governments, which is a method, used to negotiate power trading deals with its neighboring countries. The government signed a MOU with Thai Government in 1997 for the treading of 1500 MW electricity. This expired in 2010 and has not been renewed. It has been negotiating with Bangladesh Government for another power trading deal, which is expected to be finished in 2017. No other G-to-G negotiations are happening and instead the government has been negotiating project-specific MOUs. China is by far the largest partner of hydropower projects and trading deals in Myanmar. Chinese state-owned enterprises are involved in nearly every large-scale hydropower project either at the advanced planning stage or under construction stage. Together these projects represent 31,451 MW of potential generating capacity, a significant percentage of which will be exported to China. There have been 44 joint ventures projects happening at different stages.
Opportunities and Barriers
To meet the growing domestic demand for electricity, Myanmar Government has been making long-term plans to increase its electricity generating capacity five times within the next 15-20 years with private sector participations and different sources of public finance. The Government currently plans to develop 67 hydro projects over the next 20 years, as follows: 11 state-owned, totaling 2132 MW; 4 domestic BOTs, totaling 377 MW; and, 43 foreign JV/BOT ones totaling the overall production of 41,655 MW. One of the major issues for hydropower projects implementation is the resistance from the locals. The largest proposed project, the 6000 MW Myitsone dam, has been suspended since 2011 by order of the Myanmar Government due to mounting pressure from locals and environmental impact concerns. Insufficient domestic electricity supply and resources allocation for domestic and export are other major issue. Since the Government continues to sign project-specific MOUs with neighboring countries, it is creating huge domestic electricity deficit. As the local population is rapidly increasing , the government needs to allocate a significant amount of funds for internal electricity transmission infrastructure. The government also needs to export electricity to fund these infrastructures on the other hand.
Legal & Regulatory Framework
New Myanmar Investment law plays a significant role for hydropower projects and there has been a shift in policies to ease the access for FDIs in this sector. The Ministry of Energy is responsible for power generation and the distribution of electricity throughout the country. In 2006, Ministry of Electricity and Power was reorganized into MOEP 1 and 2. However, it was reintegrated back into a single ministry in 2012. There are 3 types of legal structures for hydropower projects; the state-owned model, the build Operate Transfer (BOT) model that is owned and implemented by Myanmar companies and the BOT model owned partially by foreigners, known as JV/BOT project.
Allowed Types of Investment
Investment businesses, which only the state government has right to carry out is supervision of hydro-electrical power and inspection of electricity related business. Investment businesses permitted with recommendation of Ministry of Electricity and Energy are Large scale electrical enterprise (electrical enterprise with capacity to generate more than 30 meg watts according to the Electricity Law) and Electrical operation connecting to the power system. Investment businesses allowed only in the form of joint venture with a citizen owned entity or a Myanmar citizen is electricity generation for 30 MW and below.
- Power Sector Development in Myanmar, Kee-Yung Nam, Maria Rowena Cham, and Paulo Rodelio Halili, ADB Working Paper Series, October 2015
- Myanmar Renewable Energy Policy, ADB Capacity Development Technical Assistance, September 2014