$140m World Bank loan to boost Burma electricity supply

Burma's unstable and overworked power sector will soon receive a much-needed boost, with an interest-free loan from the World Bank. In a country in which 70 percent of the population does not have access to electricity, the $140 million loan will provide a tremendous boon, as the nation continues to progress out of decades of disconnect from the rest of the world and lack of development.

The Wall Street Journal reports that the loan will be used to modernize the Thaton gas turbine plant in Mon state. The power generated from the upgraded plant will provide five percent of the supply for the national grid, and 50 percent for Mon state.

A woman looks out from her balcony as electricity and telephone cables hang close to an apartment in Yangon, Burma. Pic: AP.

Power infrastructure is currently shaky at best, even in major cities in Burma. Power cuts and outages are not uncommon; in 2012, 1,000 protesters took to the streets to rail against power cuts that left with them with few hours of power each day.

"We are specifically interested in rural electrification," the WSJ quoted Kanthan Shankar, the World Bank's country manager for Burma, as saying. The hope is that the increase in power will benefit essential institutions and services, such as hospitals and schools, that need a consistent supply of electricity.

The Associated Press reported that the loan is the first from the World Bank since January, when the organization forgave $440 million in debt owed by the Burmese government. The AP attributed the country's power woes to a "lack of funds, rising demand for energy, aging hydroelectric plants and poor grid infrastructure."

The Burmese government recently awarded telecom licenses to international companies Telenor, of Norway, and Ooredoo, of Qatar. These companies are expected to expand cellular and internet coverage in the country, and increase access for average citizens to cell phones and the internet. It stands to reason that in order to achieve their goals, they will need a reliable and consistent power infrastructure.

Increasing not only access to electricity, but establishing a reliable supply, seems crucial to Burma's development and engagement on the world stage. Greater internet coverage is important, of course, but so much of what Burma needs in order to continue moving out of its dark recent past depends upon electricity.

Improving access to electricity will improve the quality of life for many in Burma's rural areas, providing opportunities for better food preparation and storage, lighting roadways and having electronics in the home that allow them to communicate with family members and service providers, not to mention seek help in emergency circumstances.

Consider how vital electricity is to improving the health care system in the country. Forbes recently wrote about the many issues facing the healthcare system in Burma, but having a steady supply of electricity to hospitals is crucial – for treating patients, preserving foods and medicines, and performing surgery. An improvement in the power supply creates opportunities to upgrade important areas in health care treatment.

The Wall Street Journal noted that the World Bank hopes that its investment will serve as encouragement for foreign investors to develop power infrastructure in Burma, and to take note of the fact that they are pursuing a relatively simple method of doing so. However, as this author reported in July, investors have reason to be wary of diving in to Burma.

In that article, I quoted Ken Cheung, a partner at Berwin Leighton Paisner's Singapore office, as saying political instability and the potential for political upheaval make investment in the poor country a risk. However, he also noted that in order for Burma to develop in any serious way, it is "vital" for the power and energy sectors to develop.

But there is reason for optimism, especially in light of the World Bank loan. As Shankar put it, according to the WSJ,

"There is a lot of interest from the private sector when it comes to power generation in urban areas, and our stringent environmental and social safeguards make it a model that can be followed."

http://www.information.myanmaronlinecentre.com/140m-world-bank-loan-to-boost-burma-electricity-supply/