Friday, September 22, 2017

World Bank approves $400m electrification loan

The World Bank approved a US$400 million interest-free loan to provide financing and technical assistance to help bring electricity to more than 6.2 million people in Myanmar, the bank announced yesterday.

The loan will support Myanmar’s National Electrification Plan (NEP) and was granted by the bank after it received a proposal from the Ministry of Electric Power (MOEP) earlier this year.

But the loan program was only approved by parliament in August after several months of consideration against loan programs submitted by other ministries. The 32-year loan is interest free but does attract a service fee of 0.75 percent.

The World Bank’s board of executive directors approved the loan from the International Development Association, the bank’s fund for the poorest countries, to provide financing and technical assistance for the NEP, a bank statement said.

More than 70pc of Myanmar’s population has no access to electricity and bringing light to towns and villages is an urgent priority. However, Myanmar needs huge investment in electricity generation as well as transmission to power its growing economy.

“This $400 million project will help connect towns to the grid and turn on lights in schools, clinics and remote villages,” said Ulrich Zachau, World Bank Southeast Asia country director.

“We welcome and support Myanmar’s goal to achieve universal access to electricity by 2030.”

The project is expected to bring power to more than 1.2 million households in Myanmar through 2021. It aims to expand the existing grid by adding medium- and low-voltage distribution networks and also off-grid electrification with solar and mini-grids in rural areas, a bank press release says.

MOEP will spend $310 million to expand transmission lines and another US$90 million will be allocated to the Ministry of Livestock, Fishery and Rural Development.

U Maw Thar Htwe, deputy minister for electric power, told The Myanmar Times several months ago that the rural electrification plan will be done in three stages: adding those within 2 miles (3.2 kilometres) of the national grid; then widening that net to 31 miles (50km); and finally adding access far off the national grid.

Myanmar’s energy consumption is among the lowest in the world with about 70pc of the population and 84pc of rural households having no access to electricity, according to a World Bank report on June 5.

“Electricity is growing fast,” it said. “During the last five years, the electricity supplied by the national grid grew on average about 15pc a year and reached 9.6 terrawatt hours in 2013.”

About 7.2 million new connections must be added by 2030 to achieve the government’s ambitious goal of 100pc electrification, which requiring an average of 450,000 new connections a year – more than double the current rate, the June 5 project update states.

It estimated that the total cost of the 16-year rollout is $5.8 billion, which is in addition to the generation and transmission investment required to meet demand, the World Bank says.

The country’s 4255 megawatts of installed capacity is mostly generated by hydropower (70pc) and natural gas plants (27pc), MOEP says.

The MLFRD has been assessing villages in Shan, Kachin, Chin and Kayin states that will be prioritised under the NEP project which is likely to start in 2016-2017 financial year. Meanwhile, the ministry has been pushing for greater rural electrification since the 2013-14 fiscal year using the state budget. According to the ministry’s statistics, only 26,357 of 64,917 villages around the country are electrified.

“Another 2308 villages will be electrified this year using state funding,” said Daw Soe Soe Ohn, project manager for the NEP program under the MLFRD.

The World Bank Group announced plans to extend $1 billion in financial support to Myanmar’s electricity generation, transmission and distribution in January 2014.