Saturday, June 24, 2017
The Myanmar Times
The Myanmar Times

K722 million to fund two state-owned electric power firms

According to the 2017 Union Budget Law, K722 million has been allocated for Yangon and Mandalay electricity corporations – K529 million will go to the Yangon Electricity Supply Corporation (YESC) and Mandalay Electricity Supply Corporation (MESC) will receive the rest, K243 million. Both are state-owned organisations under the Ministry of Electricity and Energy.

Workers fix power lines in Yangon. Photo - EPAWorkers fix power lines in Yangon. Photo - EPA

Foreign loans as well as loans from Asian Development Bank (ADB), World Bank and Japan International Cooperation Agency (JICA) are included in the budget set for the YESC. This budget is not within the scope of funds set for the Union government. The administration does not need to pay, since the corresponding corporation will take financial responsibility for it and pay off the loans, U Tun Kywe, CEO of Yangon Electricity Supply Corporation, told the Myanmar Times.

“We have to report to the Ministry of Planning and Finance on our yearly revenue and about the businesses that we want to do this year, including the expenditure that we are permitted to use. This money is the corporation’s money, not the state’s money,” he said.

The amount of allocated funds is based on budget requests made by the respective ministries. The profits gained from the electricity corporations will be distributed as funds, rather than using the union budget. Although the government is generating electricity at a financial loss, the two electric corporations have healthy profit margins.

Yangon Electricity Supply Corporation gains a net profit of K20 billion annually from electricity distribution, after deducting wage, employee expenses and other expenditure, he added.

“We purchase electricity from the government and distribute it. The profits gained are used to operate the corporation. The corporations cannot request budgets from the government, and they cannot function without profit. Without profit, we have to shut down the corporations,” he explained.

The funds allocated for this fiscal year will be distributed among respective townships in the Yangon region and will support four districts to develop power supply.

Power distribution stations will be built, while current power stations are upgraded to meet the demands by the growing population and increasing consumption. Moreover, the newer models replace the older ones, and new cables with covers are installed to reduce power cut and to prevent accidents arising from electrocution. Small transformers will also be constructed to provide enough power supply to the public, he continued.

Both the YESC and the MESC are distributing electricity to the public by buying power from Electricity Generation Enterprise in accordance with a fixed price set by the government.

The fixed price per unit is relatively low, therefore, electricity is being sold at K57 in Yangon and K52 in Mandalay in order to help these corporations to turn a profit.

These electricity supply corporations re-sell electricity to the public at K35, K40 and K50 per unit, and K75, K125 and K150 per unit for industrial zones.

However, the price hardly offsets the cost of production per unit. The government’s electric power industry is running an annual loss, and this is increasingly a problem for the population and the government.

According to the Ministry of Electricity and Energy, Myanmar’s demand for electricity has increased annually, but power supply has been insufficient. 6.5 million out of 10 million households have no access to electricity, and barely 3.5 million has received standard electrical supplies. Although electricity consumption has skyrocketed by over 100 percent, there are still cities with little to no electricity. For the next three to four years, more than 4500MW of electricity are estimated to be consumed, and usage for this summer could increase by 3300MW or 3500MW.

Other experts pointed out that finances have not been sufficient to fund the completion of hydroelectric station in time, and investments are inadequate in the sector. New supply of power cannot fulfil the demands of the industrial zones in time.


 

Translation by Win Thaw Tar, Swe Zin Moe and Zar Zar Soe