Myanmar power cuts trigger short-term fix

FIONA MacGREGOR, Contributing writer

KYAUKSE, Myanmar -- When a newly installed 100-megawatt gas-fired power plant officially opened in central Myanmar in June, a remarkable welcome awaited the delegates who made the trip from Yangon to Kyaukse, on the outskirts of Mandalay, for the event.

     As dance music blared from a public address system, a troupe of acrobats ensconced in a multihued animal costume stepped onto a precarious-looking single-plank bridge to perform a traditional elephant dance.

     Pounding away alongside them -- although not as loudly as the music -- sat another example of a bridging act: 68 newly installed gas-powered engines, each housed in individual shipping containers. This is a "fast-track solution" to at least part of Myanmar's desperate power shortage. 

Clive Turton of APR Energy speaks at the official launch of a 100MW gas-fueled power plant in Kyaukse, central Myanmar, on June 7.

     "We can have a plant like this up and running anywhere, within weeks," said Clive Turton, managing director of Asia Pacific at Florida-based APR Energy, noting how the plant was pumping sufficient gas to meet the electricity needs of an estimated 6 million individuals.

     In a country where more than 70% of the estimated population of about 60 million has no access to an electrical grid, and in which businesses have repeatedly cited power shortages as a major impediment to investment, meeting the power needs of about one in 10 people is a significant boost.

     But the generation units are not designed to be a permanent installation. They raise two key questions: How large a role can temporary facilities play, and -- perhaps more importantly -- what longer-term solutions are on the horizon?

     "With Myanmar's chronic poverty of electric power, any respite in the form of new power generation facilities (temporary or otherwise) is most welcome," said Vikas Sharma, director of public sector and government practice at Frost & Sullivan, a Singapore consultancy.

     "I would also say that it's a good move by the government towards scoring some political legitimacy, especially in light of the coming elections, and towards assuring international benefactors such as the World Bank that it is indeed taking concrete steps towards resolving Myanmar's power quagmire urgently," he said.

Demand outstripping supply

One thing is clear: Myanmar's demand for electric power is growing too rapidly to be met by conventional generation. In neighboring Thailand, per capita electricity consumption is 2,300 kW per hour -- 18 times that of Myanmar's. With power demand in Myanmar expected to increase by 13% a year, reliable sources of electricity are critical to the nation's push to boost economic development, according to government projections.

     It took just three months for APR and its local partner, energy company Supreme Group, to get the Kyaukse plant up and running.

     In an unusual display of confidence for a U.S. company operating in Myanmar, APR began work on the plant shortly after it won the government tender to build the facility and even before the $30.5 million deal was officially signed in February, according to Turton. The plant was operating by April.

     "We found the bidding process to be very transparent," he said. "There are challenges in doing business in Myanmar, but I don't think it is any more challenging than many of the other (developing) countries where we operate."

Shipping containers housing gas turbines operate at the Kyaukse power plant.

     The Kyaukse plant is powered by gas from the offshore Shwe gas field, off Myanmar's western Rakhine coast. Much of the gas from the field is transported to China via a Chinese-built pipeline that passes 8km from Kyaukse. The government has allocated 19 million standard cubic feet of gas per day to the Kyaukse facility, which enables the plant to generate 82MW. APR's director of project management, Jason Aberdeen, said the plant could run at 100MW if more gas were allocated.

     Government officials seemed pleased with the short-term solution.

     "We have to recognize how helpful (having this supply) has been over the summer months, when we needed power the most," said Win Myint, chief engineer of the Ministry of Electric Power's thermal energy department. 

     Describing the fast turnaround time as "very impressive," he said traditional power plants could take six years to become operational.

     Myanmar has traditionally relied on hydropower, but water shortages during the annual dry season have often left plants unable to generate at full capacity, resulting in frequent power cuts.

     Hydropower growth has also been hampered by controversy over its environmental and community impact on a largely rural populace. The $3.6 billion Myitsone Dam project in the northern state of Kachin, was being developed by China Power Investment and its local partner, Asia World, with a theoretical capacity of 6,000MW. But the plant has been suspended since the government in late 2012 abruptly halted work on the project due to public protests. In any case, most of its potential output had been earmarked for export to China.

Power sources

Hydropower remains by far the biggest source of electricity in Myanmar. In 2012, it accounted for about 71% of electricity generated, with gas providing about 26% and coal about 2%. However, that could be set to change.

     Local media quoted Khin Maung Win, managing director of the Electric Power Ministry, as saying coal plants would be necessary to make up the current electricity shortfall, and that the government was considering adopting World Bank carbon emission standards when constructing coal facilities. However, he also acknowledged the high costs of such projects.

     At the end of June, the government indicated it was seeking to move away from its reliance on hydropower in a proposed energy plan for the next 15 years that would increase coal power production to 33% of total generation, with renewable sources contributing 9%, hydropower falling to 37% and gas slipping to about 20%.

The Kyaukse plant currently generates 82MW of power, but it could kick out 100MW if allocated more natural gas.

     It is understood that loans from the World Bank would be central to the government's proposal to develop longer-term construction projects, but Frost & Sullivan's Sharma suggested that unpopular price rises would also be necessary.

     "In my mind, there is no doubt that electricity tariffs in Myanmar need to be increased for there to be long-term development in the sector. The highly subsidized prices currently (levied) have rendered the ministry virtually bankrupt, and with no means to upgrade (or) expand infrastructure," he said, adding that the low prices also deterred foreign investors.

     Sharma also questioned the recently announced proposals to develop coal-fired power supplies, which would represent a departure from the government's previous support for gas-powered generation as the main alternative to hydro. There is currently only one coal-powered plant in Myanmar.

     "Given the high capital expenditure, low efficiency and pollution issues involved, I don't see much movement in terms of coal-fired plants in the future," Sharma said.

     "Myanmar already has a vast supply of natural gas available locally, which can be used to fuel these plants.  (The Electric Power Ministry) has made its preference for gas-power known, and announced ambitious plans to add 2,500MW of new capacity by 2016," he said.

     General Electric, the U.S. energy-to-finance group, has also been working with the Myanmar government on a plan for power development through to 2020. According to GE, this plan also envisions a shift in Myanmar's technology mix over this period to include more gas-fired generation.

     Turton said he would be keen to develop business with the Myanmar government in order to supply more permanent gas turbine technology at Kyaukse and elsewhere in the country.

     Myanmar would need to develop a variety of power sources, including hydro, but gas turbines should play a significant role, he said. "We would like to be part of a broader strategy towards building up Myanmar's power (infrastructure)."

     In the meantime, APR representatives say privately that despite the company's limited initial contract, which runs for 18 months, it does not expect to be leaving Kyaukse "anytime soon."

     That may represent an element of business bravado, but the challenges presented by Myanmar's electrification drive suggest that "temporary" fixes are likely to play a key role for years to come.