Summer blackouts likely as emergency power deals hit snag

By KYAW PHONE KYAW | FRONTIER

YANGON — Electricity shortages are likely during the coming hot season, Frontier has learned, because the government has not concluded contracts for emergency power supply despite holding a tender last year.

The government had previously planned to have two separate 300-megawatt emergency power sources in place by summer, when demand spikes and production from the country’s hydropower dams drops sharply.

But several government officials confirmed that the power purchasing agreements with the private power suppliers have still not been signed.

U Khin Maung Win, the managing director of Electricity Power Generation Enterprise, confirmed that the government had not signed PPAs with either of the two providers.

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“We’ve submitted the draft [PPA] to the higher level but we haven’t got permission [to sign it] from the respective department,” he said, refusing to say which department he was referring to.

He added: “I can’t say when the PPA will be signed. We are still discussing it.”

Asked whether the government had a backup plan to supply electricity to the country during the hot season, he said EPGE would “distribute as much as we possibly can” to the whole country.

U Maung Maung Latt, chairman of Yangon Electricity Supply Corporation, said the government would only begin buying electricity from the two companies in 2018.

“It won’t be ready for this summer,” he confirmed.

He said that the government was instead planning to generate additional power for the hot season through natural gas.

“I don’t mean we will build new gas turbines – we have turbines that are not running at existing power plants so we will give more gas to these plants to run the turbines.

“I will hold a press conference soon to explain YESC’s plan to the media and public.”

At a March 3 stakeholder forum on electricity and energy, both Yangon Region’s electricity minister and the Union deputy minister for electricity and energy confirmed that Yangon residents should expect blackouts as usual this summer.

It wasn’t meant to be this way. Last year, the government appeared to have plans in place to meet hot season demand.

In July 2016, the Electric Power Generation Enterprise issued an emergency power tender, seeking to buy 300 megawatts for five years. The tender said the capacity should be in place by the hot season of 2017 and the winner would be chosen based on price.

In October, EPGE announced that a consortium comprising local firms National Infrastructure Holdings, and MCM Pacific and US companies APR Energy and Ace Resources Group had won the tender and would build a heavy fuel oil power plant in Yangon’s Ahlone Township. For the first year, while the plant was being built, diesel generators would provide the 300 megawatts of power.

But underscoring the huge task Myanmar faces in meeting just its immediate energy needs, the government also agreed to buy power from the runner-up bidder, Karpowership of Turkey.

The company planned to send a ship laden with diesel generators to Myanmar, where it would pump another 300 megawatts into the grid to meet hot season demand.

Under the letters of agreement that were signed with the companies in October, the PPAs – which dictate the price at which the government will buy the power – were to be signed in January.

However, as of last week they still hadn’t been signed.

U Aung Tun Myint, the general manager of Perpetual Power Solution, a subsidiary of MCM, said that under the original timeline, the company would be required to begin producing power within 90 days of signing the PPA.

During hot season it needs to run the plant at 90 percent of capacity and 50 percent of capacity during rainy season.

Without the PPA, the project can’t move forward, though. Because the PPA dictates the price the government will buy the power, it would be risky for the company to invest in the necessary equipment until the agreement has been signed.

Aung Tun Myint said it would take up to three months to buy and install the equipment needed for the plant.

That makes it highly unlikely that the project could come online before the rainy season.

“For our side, we want to sign PPA as soon as possible,” he said. “We have already prepared the land for the power plant and built the roads. But we need to import some heavy machinery from abroad for the plant and we are hesitant to do that until we sign the PPA because it would be quite risky.

“I can’t say the exact date for when we will start electricity production because we don’t know when we’ll sign the PPA.”

Yangon Region Minister for Planning and Finance U Myint Thaung confirmed to Frontier that no price had been set for the purchase of the power from the plant, which is to be located in Seikgyikanaungto Township.

But he suggested that the project could still be up and running by May. “They can build the power plant even though the PPA hasn’t been signed yet,” he insisted. “If we didn’t want them to produce electricity, why would we give them the land for the site?”

He said the PPA was the responsibility of the Union government so he didn’t know when it would be signed.

By Kyaw Phone Kyaw

By Kyaw Phone Kyaw

Kyaw Phone Kyaw has been a journalist since 2010. He worked at the Myanmar Times before joining Frontier and specialises in business and politics.
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