ASEAN
22 March 2014
Has Myanmar ‘Switched On’ Power Yet?
Has Myanmar ‘Switched On’ Power Yet, asks Frost & Sullivan's Vishal Narain?
Has Myanmar ‘Switched On’ Power Yet, asks Frost & Sullivan's Industry Analyst, Vishal Narain?
The recent easing of sanctions by Western countries against Myanmar could prove to be a cornerstone in the nation’s economic development. Till sometime back a pariah in the world economy, Myanmar is now being dubbed as the “Final Frontier in the Asian Economy”.
The rewards are however strained by potential risks that could hamper the investments. As the economy attempts to take off from the current position, the power sector holds the key to support rapid economic growth in the currently power starved country.
This is likely to create significant investment opportunities in the power sector. Currently, there exists a major power crisis in the country. The scope to bridge the impending power demand-supply gap offers huge investment opportunities for both the multinational and domestic companies across the power industry value chain from generation to transmission and distribution and in distributed power generation including power rental sector.
The demand for power shot up by 15% in 2012 which has led to the current power crisis. A lot of projects in the recent past have increased the power generation capacity but only 13% of the country’s entire population has access to electricity.
Myanmar has a per capita power consumption of only 104 KWh compared to a consumption of over 2,000 KWh in Thailand and around 600 KWh in Indonesia. In the current scenario of reforms, the country is likely to attain higher consumption levels in less than two decades, which means a capacity of up to 50 GW in that time frame. This would entail an investment of roughly $50 billion in the power generation sector alone.
Recent investments in power generation projects are a testimony to the potential growth opportunities.
· Myanmar’s Ministry of Electric Power has recently entered into agreements to build power plants with General Electric and Caterpillar of the US.
· A 600 MW coal-fired power plant will be built with J Power Company of Japan.
· A 500 MW gas powered plant will be built with a South Korean consortium led by BKB Co of South Korea.
Myanmar has so far relied heavily on hydropower projects which puts power generation at the mercy of rains. In the future, we may expect a conscious decision to move away from hydropower and encourage a diversified mix in power generation. This could pave way to more investments in conventional thermal power plants.
The T&D segment, which was under state monopoly, has been opened up for foreign investments in 2012. Chinese firms have taken the lead in approaching the government for distribution upgrading projects.
Massive investments in upgrading power T&D infrastructure could help the government reduce power loss and thereby, manage the power crisis more effectively. This sector offers immediate investment opportunity for power T&D companies. For instance, in March 2012, India’s central transmission utility PGCIL acquired a contract to set up 268 miles of 230 KV transmission and supporting sub stations.
To increase the electrification ratio, the Myanmar government plans to set up as much as 5,000 miles of 230KV transmission lines with eight substation projects to support the grid. This is capable of generating investments worth $1 billion over the next ten years.
The increasing inflow of foreign tourists and expatriates looking to set up representative offices in Myanmar is likely to boost the demand for residential and office spaces. With an immediate mandate to welcome foreign investments in as many sectors as possible, the government would have to order generators from foreign firms to deal with the impending spike in power requirements. Besides, private real estate companies providing residential / office spaces to expatriates are more likely to depend on power rental solutions. Demand for distributed power generation is likely to remain high till 2015 and later likely to reduce as new thermal, gas and hydro power plants are commissioned.
In the wake of government’s openness to reforms and private sector participation in nation-building, there are significant short-term and long-term investment opportunities for foreign companies across the power industry value chain. However, investing firms should exercise caution in this highly risky market by taking into consideration the interest of multiple stakeholders in major power projects that could upset investment plans.
For media queries or more information please contact This email address is being protected from spambots. You need JavaScript enabled to view it.
The recent easing of sanctions by Western countries against Myanmar could prove to be a cornerstone in the nation’s economic development. Till sometime back a pariah in the world economy, Myanmar is now being dubbed as the “Final Frontier in the Asian Economy”.
The rewards are however strained by potential risks that could hamper the investments. As the economy attempts to take off from the current position, the power sector holds the key to support rapid economic growth in the currently power starved country.
This is likely to create significant investment opportunities in the power sector. Currently, there exists a major power crisis in the country. The scope to bridge the impending power demand-supply gap offers huge investment opportunities for both the multinational and domestic companies across the power industry value chain from generation to transmission and distribution and in distributed power generation including power rental sector.
Building Installed Capacity Base to Increase Electrification Ratio
Myanmar has an estimated installed power capacity of 2,254 MW that has grown annually at a rate of 10% since 2007. Up to 70% of the power generation capacity is from the 18 hydropower plants which generate up to 1,270 MW during the rainy season and 1,000 MW during the dry season. The gas fired plants generate up to 350 MW.The demand for power shot up by 15% in 2012 which has led to the current power crisis. A lot of projects in the recent past have increased the power generation capacity but only 13% of the country’s entire population has access to electricity.
Myanmar has a per capita power consumption of only 104 KWh compared to a consumption of over 2,000 KWh in Thailand and around 600 KWh in Indonesia. In the current scenario of reforms, the country is likely to attain higher consumption levels in less than two decades, which means a capacity of up to 50 GW in that time frame. This would entail an investment of roughly $50 billion in the power generation sector alone.
Recent investments in power generation projects are a testimony to the potential growth opportunities.
· Myanmar’s Ministry of Electric Power has recently entered into agreements to build power plants with General Electric and Caterpillar of the US.
· A 600 MW coal-fired power plant will be built with J Power Company of Japan.
· A 500 MW gas powered plant will be built with a South Korean consortium led by BKB Co of South Korea.
Myanmar has so far relied heavily on hydropower projects which puts power generation at the mercy of rains. In the future, we may expect a conscious decision to move away from hydropower and encourage a diversified mix in power generation. This could pave way to more investments in conventional thermal power plants.
Antiquated Transmission & Distribution (T&D) Lines Offers Medium-Term Investment Opportunities
Myanmar has a very antiquated power distribution system with some cables as old as 40 years and more than half the cables transporting power at less than 230KV (i.e. at 66KV and 132KV). As a result, power losses are significant which was as high as 15% in 2009.The T&D segment, which was under state monopoly, has been opened up for foreign investments in 2012. Chinese firms have taken the lead in approaching the government for distribution upgrading projects.
Massive investments in upgrading power T&D infrastructure could help the government reduce power loss and thereby, manage the power crisis more effectively. This sector offers immediate investment opportunity for power T&D companies. For instance, in March 2012, India’s central transmission utility PGCIL acquired a contract to set up 268 miles of 230 KV transmission and supporting sub stations.
To increase the electrification ratio, the Myanmar government plans to set up as much as 5,000 miles of 230KV transmission lines with eight substation projects to support the grid. This is capable of generating investments worth $1 billion over the next ten years.
Distributed Power Generation – Short-term Solution to Power Shortages
Diesel generated power is a familiar source of electricity in many parts of rural Myanmar that lack utility grid. However, diesel fired generator sets cater to the power requirements of urban areas as well during major power outages. Recently, 52 heavy duty generators were bought by the government from multinational companies such as GE, Caterpillar and other Japanese firms to manage the power shortage.The increasing inflow of foreign tourists and expatriates looking to set up representative offices in Myanmar is likely to boost the demand for residential and office spaces. With an immediate mandate to welcome foreign investments in as many sectors as possible, the government would have to order generators from foreign firms to deal with the impending spike in power requirements. Besides, private real estate companies providing residential / office spaces to expatriates are more likely to depend on power rental solutions. Demand for distributed power generation is likely to remain high till 2015 and later likely to reduce as new thermal, gas and hydro power plants are commissioned.
In the wake of government’s openness to reforms and private sector participation in nation-building, there are significant short-term and long-term investment opportunities for foreign companies across the power industry value chain. However, investing firms should exercise caution in this highly risky market by taking into consideration the interest of multiple stakeholders in major power projects that could upset investment plans.
Acknowledgements and contacts.
This article was authored by Vishal Narain, Industry Analyst, Asia Pacific Energy Practice, Frost & Sullivan.For media queries or more information please contact This email address is being protected from spambots. You need JavaScript enabled to view it.