|
Myanmar's energy policy framework includes (i) maintaining the status of independence, (ii) promoting the wider use of new and renewable sources of energy, (iii) promoting energy efficiency and conservation, and (iv) promoting the use of alternative fuels in households. There are eight concerned ministries in Myanmar responsible for energy matters whilst the Ministry of Energy is the focal point for overall energy policy and policy coordination with these ministries. The roles and responsibilities of the three key ministries are: (i) Ministry of Energy which oversees overall energy policy, oil and gas sector; (ii) Ministry of Electric Power No. 1 for hydro and coal power generation; and (iii) Ministry of Electric Power No. 2 for power transmission and distribution, gas-fired generation, and mini-hydro. As of 4 September 2012, the Government combined Ministry of Electric Power No. 1 and Ministry of Electric Power No. 2 into a single Ministry of Electric Power (MOEP) but retaining the operational functions under the new Ministry. The power sector in Myanmar is governed by Electricity Act 1948 (as amended in 1967), the Myanmar Electricity Law (1984), and Electricity Rules (1985). These legislations now need revisions to reflect the current international best practices of governance in the power sector. There is also a pressing need to develop (a) a grid codes, and (b) model power purchase agreements for small and large power generation projects. These rules and draft models do not exist and will have to be based on current international best practices along with appropriate guidelines and requirements to allow independent power producers to connect with Myanmar national grid. The power sector in Myanmar is now under the responsibilities of the newly established MOEP which is responsible for (i) developing, implementing, operating, and maintaining all large hydropower plants; (ii) coal-fired thermal power plants; (iii) construction, operation, and maintenance of the transmission and distribution systems throughout the country; (iv) operating and maintaining the gas-fired thermal power generation; and (v) planning, implementing, and operating mini-hydropower plants. The MOEP consists of seven departments: (i) Department of Hydropower Planning, (ii) Department of Hydropower Implementation, (iii) Hydropower Generation Enterprise, (iv) Department of Electric Power, (v) Myanmar Electric Power Enterprise, (vi) Yangon Electricity Supply Board (YESB), and (vii) Electric Supply Enterprise (ESE). The Department of Hydropower Planning plans hydropower projects to be implemented by it, by local provincial enterprises or by joint ventures with foreign investors. The Department of Hydropower Implementation has four institutes responsible for design, investigation works, and mechanical works; and seven engineering construction companies capable of construction and installation of large hydropower projects. The Hydropower Generation Enterprise operates and maintains all of MOEP s hydropower stations and participates in the operation and maintenance of power plants under joint ventures. Despite its name, Hydropower Generation Enterprise also operates the country s single coal-fired power plant with a capacity of 120 megawatts (MW). The Department of Electric Power s main function involves power system strategic planning. The Myanmar Electric Power Enterprise is responsible for the development and implementation of transmission network and its operation and maintenance, and the operation and maintenance of gas-fired power plants including gas turbines and combined-cycle gas turbines. The transmission network under Myanmar Electric Power Enterprise s responsibility covers the following voltage levels: existing 66 kilovolt (kV), 132 kV, and 230 kV; and the planned 500 kV (currently being constructed in four phases). The distribution systems consist of lower voltage level, namely: 33 kV, 11 kV, 6.6 kV, and 0.4 kV. Two distribution enterprises (YESB and ESE) operate the distribution systems. The YESB is responsible for the supply of electricity to consumers in Yangon City whereas ESE covers the rest of the country comprising 17 states and divisions, including off-grid generation and distribution. It is also responsible for planning, implementing, and operating off-grid mini hydropower and diesel stations. Correspondingly, YESB and ESE also implement system improvement and expansion of distribution systems. The MOEP is responsible for policy and oversight of the power sector and is vested with all operating and management responsibilities for the sector except regulatory functions. However, in the absence of a regulatory framework to support the functional unbundling that will need to take place in the near future, MOEP will need clear directions on how this could be achieved via a revised Electricity Law. MOEP has a draft concept note on power sector policy to give it direction in the sector. This draft concept note outlines a reform strategy for rationalizing power sector institutions and functions, gradual commercialization of institutions, developing a regulatory framework through an Electricity Law, adopting cost-based tariffs, promoting private sector participation, increasing rural access to electricity, and undertaking demand-side management. The Government also recognizes that foreign direct investment will be required to achieve projected investments in the power sector. A framework to attract build-operate-transfer investments will also need to be adopted. Notable features of such a framework includes guaranteeing convertibility of local currency into foreign currency, permitting mortgaging of project assets, specifying taxation levels, and allowing risk sharing by the Government and private investors. Various shortcomings, however, continue to impede rapid development of build-operate-transfer-type projects in the power sector, principally the lack of a comprehensive and transparent regulatory framework. The Government recognizes the importance of this and is taking the first steps to strengthening legislation for the power sector by drafting an updated Electricity Law. An initial draft concept of an Electricity Law has been prepared by a working committee under the supervision of the Minister of MOEP. This committee comprises of members only from MOEP but will need to be enhanced to include members from the Ministry of Energy and Ministry of National Planning and Economic Development. The Minister of MOEP is keen on having a new draft law that aims to provide a broad framework for the development and regulation of the electricity sector. The Law as formulated now is quite general. It identifies the institutions that will be required, and outlines principles and concepts for allocation of tasks among agencies, development of a national electricity master plan, creating a framework for licensing and contracting, and regulating tariffs and investment programs. More specifically, the draft Law needs to cover the following topics: objectives of the Law; duties and responsibilities of Government institutions; suggested scope of a national energy policy; rights and duties of electric utilities; functions and structure of an Electricity Regulatory Authority (ERA); factors to be considered in the supply and use of power such as safety, economy, service curtailments, metering, customer contributions, etc.; licensing and approval of investments; principles and procedures in tariff setting; and inspection, and audit and penalties amongst others. The Electricity Law is expected to serve as the basic foundation for the regulatory framework. At the same time, its usefulness will be limited until it is operationalized by drawing up supporting secondary legislation, regulations, and instructions, and setting up the ERA as envisaged under the Law. The ERA is expected to play a central role in the strategic development of the power sector (leas |