Despite a hydropower potential of 100 GW, over two third of Myanmar’s population lives in darkness. In order to bring electricity to every house by 2030, the government of Myanmar has drafted National Electrification Plan (NEP). And to meet the plan, the country requires massive investment from domestic and foreign investors in its power sector especially, hydropower.
As per NEP, the country targets to electrify 50% households in next three years and 100% by the end of 2030. At present, around 7.5 million households have no access to electricity out of almost 11 million households in the country.
To meet country’s short-term and long-term power requirement, Myanmar estimates to produce 7.5 GW and 16.5 GW electricity by 2020 and 2030, respectively. It is generating around 4 GW currently of which hydropower contributes almost 3 GW.
The spiralling domestic demand for electricity is one of the reasons to make Myanmar lucrative destination for investors. Of the projected total power production, more than 50% is expected to be generated by Individual Power Producers (IPPs).
The country has identified more than 300 hydropower projects where it expects high investment from IPPs in the near future. Technically, the designated projects have combined potential capacity of over 46 GW.
Besides, the strategic location of Myanmar and new Foreign Investment Law are other prominent factors to lure IPPs in this Southeast Asian nation.
Strategic Location of Myanmar: Myanmar shares border with five countries—China, Bangladesh, Laos, Thailand and India. All these countries are emerging economies which together account for around 20% of the global GDP. Myanmar is likely to earn foreign exchange by exporting electricity to these power-hungry nations where demand for electricity is growing rapidly.
New Foreign Investment Law: With new foreign investment law in effect, the economy of the country is engulfed by the wave of optimism including hydropower sector. It is the effect of the law which paved way for Toshiba and Asia World and China’s Hanergy Group in Myanmar. They will be generating over 1700 MW electricity combined in short run. The law has extended several benefits to attract investors:
- 100% foreign ownership
- The law ensures right to use land for 50 years with renewable provision. After 50 years, investors can renew the contract twice in the gap of 10 years each. It means investors can use the land for 70 years.
- Tax holidays for up to seven years
- Relief from custom duties while importing raw materials and construction materials etc.
According to the report by the World Bank (WB), Myanmar has hydropower potential of more than 100 GW. The Kayin, Shan and Kayah states of the country are identified as major hydropower resources. Harnessing the abundant potential of hydropower will not only make Myanmar an electricity exporting nation but also help to boost its economy. As per WB, the economy of Myanmar is expected to grow slightly over 7% by 2020. And as a matter of fact, availability of electricity will play a prominent role in this regard.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830