An Overview of Myanmar Power Sector

1. Republic of the Union of MyanmarElectricity Sector Financial and Regulatory Issues18 May 2016byMyanmar Energy TeamThe World Bank

2. An Overview of Myanmar Power Sector • Institutions: • Ministry of Electricity and Energy • Policies and planning • Regulatory roles • Transmission and system control • Enterprises & Corporations • Electric Power Generation Enterprise • Distribution functions: ESE, MESC, YESC • Fuel suppliers: MOGE, MPPE • Private sector participants • Private power producers (14 operating) • Private contractors/concessionair for distribution

3. An Overview of Myanmar Power Sector (cont.) • Recent Statistics: • Installed grid generation capacity ~ 4,900 MW • Hydropower ~ 3,100 MW (1,100 MW private) • Gas-fired ~ 1,600 MW (900MW operating; 622 MW private) • Coal ~ 120 MW • Installed off-grid generation capacity ~ 135 MW • Peak demand ~ 2,500 MW (February 2016) • Final electricity salesin FY2014/15 • ESE & MESC ~ 6,333 million kWh (averaged 70 kyats) • YESC ~ 4,922 million kWh (averaged 79 kyats) • Electricity loss in FY 2014/15 • Transmission loss ~ 3.3% • Distribution loss ~ 15 – 18%

4. An Overview of Myanmar Power Sector (cont.) • Electricity Tariffs: • Wide range 35 – 150 kyats/kWh • Uniform tariffs across the country and time of services • “Domestic tariffs” – largely residential customers 35-50 kyats/kWh • Non-residential customers 75-150 kyats/kWh. No demand charge • FY 14/15 financial loss ~ 5.3 kyats/kWh of final sales • Preliminary FY 15/16 loss ~ 22 kyats/kWh of final sales or over [240] billion kyats

5. Key Sector Financial Issues: Revenue side: • Overall electricity tariffs below the cost of supply Cost side: • Growing demand for electricity…more sales mean more losses • Increase in natural gas cost due to currency depreciation • Expanding investment to meet growing demand and electrification Debt management: • Growing debt financing Contractual obligations: • More contracts with private sector, requiring management of explicit and contingent obligations

6. Options for financial sustainability and regulatory policies: Short-term • Purchase more electricity from existing hydro IPPs and neighboring countries • Prepare for electricity tariff changes to reflect the cost of supply and to encourage demand-side efficiency • Public relations outreach on policy changes, including tariffs • Provide transparent subsidies to MOEE/electric enterprises from the State budget. • Establish dedicated power sector regulatory function

7. Options for financial sustainability and regulatory policies: Longer-term • Integrated energy planning & pricing • Continued generation, transmission & distribution efficiency improvement • Demand side management • Scale-up renewable energy sources (e.g. solar, biomass and wind) at the grid and users levels • Targeted subsidies for vulnerable consumers • Allow electric enterprises to retain profit for investment • Prudent debt management

8. Annex

9. Energy Sector Regulatory Arrangement in S.E. Asia Source: Economic Research Institute for ASEAN and East Asia

10. Example: Thailand Electricity Tariff Structure Base Residential Tariffs • Cut off at 150 kWh/month • Energy charge only (no demand charge) • 7-13 US cents/kWh • < 150 kWh “limited cross-subsidies” for 30 kWh…still cover variable cost • > 150 kWh tariffs fully cover cost. Vary profits. • TOU 7-17 US cents/kWh

11. Example: Thailand Electricity Tariff Structure (cont.) Demand > 1000 kW Large Users Tariffs • Time of Day structure • Encourage demand shift to partial peak and off peak • Same energy charge rates as Medium Users (30-1000 kW)

12. Example: Thailand Electricity Tariff Structure (cont.) Demand > 1000 kW Large Users Tariffs • TOU energy charge 7-12 cents, depends on kV • Zero off-peak demand charge • Vary demand charge by voltage level

13. Q & A