Myanmar's energy sector offers a wealth of possibilities but the country lacks the capital required to develop it, according to an initial assessment by the Asian Development Bank (ADB). The Southeast Asian country, which recently embarked on sweeping reforms to its political and economic system, possesses an abundance of energy sources ranging from oil, gas, hydropower, geothermal and renewables. However, a lack of qualified personnel, poor legal and regulatory frameworks, and a lack of planning and coordination among its ministries mean that the potential remains unfulfilled.
"Myanmar's energy sector has suffered from decades of under-investment, and only one in four people currently have electricity access," said Anthony Jude, Director of the Energy Division in ADB's Southeast Asia Department. "As Myanmar continues to open up, there is a remarkable opportunity to utilize domestic energy resources to power the country's development, but it's essential that strong, enforceable environmental and social safeguards be firmly in place."
The initial assessment was conducted by an ADB team during a 10-day visit in September 2011. From the initial findings, as well as subsequent visits and consultations with government officials, it is apparent that Myanmar is already taking steps to exploit its energy resources, both for overall economic development and for direct social benefit to its people, such as better electricity supply in the rural areas.
ADB's energy policy framework is centred around four main goals: (i) Maintaining energy independence; (ii) promoting the wider use of new and renewable sources of energy; (iii) promoting energy efficiency and conservation; and (iv) promoting household use of alternative fuels. The complexity of the work requires the involvement of seven different ministries, with the Ministry of Energy serving as the focal point.
Nonetheless, to fully tap the massive potential of its energy sector, Myanmar will need to also consider adopting other strategic approaches. These include inviting foreign technical expertise and foreign investment for participation in its hydropower, oil, and gas subsectors; expanding the capacity of existing LNG plants and implementing new liquefied natural and petroleum gas production projects; and substituting the use of liquid fuel in the transport sector with compressed natural gas.
With the caveat that a more comprehensive assessment is needed, the ADB suggests in its initial assessment that international investment in Myanmar's energy sector can focus on several priorities in the medium and long term, specifically:
- Rehabilitation works in power generation, transmission, and distribution
- Construction of gas power plants in Yangon
- Construction of a 500kV transmission line from the north of the country to Yangon
- An integrated, comprehensive plan for hydropower development
- Rehabilitation and upgrading of coal and gas-fired generation plants, refineries, and natural gas pipelines
Clearly, strengthening Myanmar's energy sector will also be critical to alleviating poverty and enhancing the medium and long-term development prospects of the country. Myanmar is one of five major energy exporters in natural gas in Southeast Asia, with offshore gas being the country's most important source of export revenues.
At the same time, as documented by the International Energy Agency in itsWorld Energy Outlook 2012, Myanmar is an extreme example of "energy poverty". It suffers from poverty-level per capita incomes and an electrification rate that ranges from 67 percent in Yangon to as little as 16 percent in the rural areas. Most households rely on burning firewood and animal dung in poorly ventilated dwellings, leading to acute respiratory diseases and high mortality/morbidity rates.
As the country opens up, electrification will become an urgent requirement for inclusive and sustainable economic progress.
The Asian Development Bank was established to facilitate economic development of countries in Asia. The regional development bank's full report, Myanmar: Energy Sector Initial Assessment, can be downloaded here.