“An increase in rates will take place this year, but only after we seek recommendations from all stakeholders will we announce the new rates that will not affect the lives of ordinary people too drastically,” U Soe Myint said.

“The rationale for raising the rates has already been explained to committees in the upper and lower houses of the Assembly of the Union, regional and state ministers, and members of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The reasons will also be explained to the 600 MPs of the upper and lower houses. Only when this is done and all objections have been heard will the government announce the new rates,” said U Soe Myint.

Representatives from the industrial sector, UMFCCI and government ministries held talks about the rate increases in Nay Pyi Taw this month, said UMFCCI chair U Maung Maung Lay.

“Myanmar’s electricity charge is the lowest in the region. The country loses around K500 billion annually for distributing electricity and this hampers development,” U Maung Maung Lay said, adding that no country in the world can afford to do this.

“The cost of distributing electricity in Myanmar is not balanced between income and expenditure. Any country would have to review its rates if it faces this issue. However, a mechanism should be created so people are not overly burdened.

The rich use more electricity than the poor, so the government must decide how it will implement higher rates,” said U Maung Maung Lay.

Currently, the government incurs costs of K89 per unit to generate and distribute electricity from hydropower, and K178 per unit for electricity from natural gas, according to the Ministry of Electricity and Energy.

In terms of charges for end-users, per-unit prices of electricity for households are K35 from 1 unit to 100 units; K40 from 101 to 200 units; K50 above 201 units and street lights. For businesses the charges are K75 from 1 unit to 500 units and up to K150 per unit above that.

Deputy Minister of Electricity and Energy Dr Tun Naing revealed that the government has been subsidising K.23 for the sale of every unit of electricity in the country meaning large amounts are spent on providing electricity to the public, rather than investing in the actual development of the country,

“At the present, 35pc of people in the country have access to electricity at the expense of the state’s finances. So, it’s been a challenging situation for the state to provide electricity to the other areas which don’t have access to it. In my point of view, business owners are enjoying electricity at less than reasonable charges,” he said.

Currently, only over four million households have been electrified out of over 10 million households in the country. Despite the fact that the state is able to generate only over 3,000 MW of electricity at present, electricity demand has been rising by 15pc on a yearly basis. According to the demand forecast, about 6,000 MW will be required in 2020-2021, the Ministry of Electricity and Energy (MOEE) said.

The rate of increase in electricity consumption typically rises by 15 percent per year on average. This fiscal year though, demand is expected to increase by 19pc. As such, the MOEE is aiming to raise supply to 3700 megawatts during the period, from 3400MW this year. The ministry expects to spend K578 billion.

Myanmar generates most of its energy through gas and hydropower plants. As construction of several hydropower projects is still ongoing, additional energy requirements for the fiscal year will be supplied by three gas-fired power plants.

These include the 225MW combined-cycle Sembcorp Myingyan gas plant, which commenced operations this month, a second gas plant producing 90MW of energy in Myingyan as well as a 145MW plant in Belin, Kyaukse.

Meanwhile, as existing gas fields in Myanmar deplete, the government is preparing to open up tenders for 31 offshore gas fields this year, the first time it has done so in five years. The MOEE is now also revising the terms and conditions of the production sharing contracts that will be offered to the winning bidders in the tender exercise.

In the meantime, it has announced plans to plug the country’s gas deficit with liquefied natural gas.

Source: https://www.mmtimes.com/news/new-electricity-rates-set-be-announced-year.html