The 1st PARI-ERI Joint Workshop Report

Kensuke Yamaguchi
Visiting Researcher, Energy Research Institute, Chulalongkorn University, Bangkok, Thailand

Mar. 28, 2014

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The Evolving Energy Relationship between Thailand and Myanmar

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Program

Cooperation in the electricity field between Thailand and Myanmar: Toward building a win-win relationship

Thailand, one of the most developed countries in ASEAN, has started experiencing a tight labour market. Namely, similar to other developing countries, the Thai economy is characterized by not only rapidly hiking wage levels, but in particular the increasing national energy demand, which has made the energy market including electricity very tight. In contrast, Myanmar, its neighbouring country, has been spotlighted in recent years as one of a few prosperous economic frontiers left in Asia, after their political regime change. While Myanmar is an important regional energy supplier for Thailand, Myanmar itself expects increasing energy demand to fuel its domestic economic growth. Looking at these two ASEAN countries, we face here a few critical questions: how can they build a mutually reciprocal relationship beyond the existing discrepancy in terms of economic development? What are the pre-requisite conditions for it? And how can international society contribute to it?

Needless to say, energy and electricity is one of the key priorities. Leveraging Thailand's economic strength and understanding the energy reality in Myanmar, can these two countries build a constructive win-win relationship in the field of energy including electricity sectors? This has been a kick-off point for a collaboration project between UTokyo Policy Alternatives Research Institute (PARI) and the Energy Research Institute (ERI) at Chulalongkorn University, which was launched in October 2013. Considering this background information, ERI and PARI co-organized the joint workshop 'Evolving Energy Relationship between Thailand and Myanmar' on December 16th, 2013, supported by the Economic Research Institute for ASEAN and East Asia (ERIA). The focus of the workshop was to multi-dimensionally capture the major investors’ risk perceptions in the bilateral power development projects, which have not been fully successful between the two countries. At the workshop, there were more than 30 participants from academia, Thai utilities companies, and governmental bodies.

How can the bottleneck of economic growth, the low rural electrification in Myanmar, be overcome?

After the welcome remarks by Associate Professor Dawan Wiwattanadate, Chulalongkorn University, the first session was kicked off by Dr. Sakata providing an overall picture of 'rural electrification in Myanmar', which is both a joint project with PARI and ERIA. It weighs the significance of developing a rural electrification strategy, as the electrification rate still remains remarkably low in the rural areas of Myanmar and this will possibly result in becoming an obstacle to its future development, despite its potential economic growth. Although expansion of the grid brings rural electrification, this process will take time. As a result, Dr. Sakata emphasized that an immediate solution could be the utilization of off-grid technologies taking advantage of locally available resources, such as mini-hydro generation and electricity trade with bordering countries such as Thailand and China.

In addition, Mr. Yamaguchi from Energy Research Institute, Chulalongkorn University, proposed the ideal win-win power trade between Myanmar and its neighbouring countries such as Thailand or China (see figure 1) and stressed that the workshop necessitates a comprehensive identification of the 'barriers' and 'challenges' that Thai investors have faced when attempting to strengthen the bilateral partnership in power trade.

Figure 1. Proposed win-win power trade between Myanmar and Thailand

Energy prospects in Myanmar

Relevant to the perceived risk in power investment, three keynote speeches followed and the first speaker, Dr. Li, an energy economist at ERIA, gave a presentation on the energy trend of Myanmar. This research has been developed by quantitative modeling both for a 'business as usual' scenario (BAU) and 'alternative policy scenario' (APS) employing various macroeconomic indicators available internationally and surveyed by industries and governmental bodies. In detail, driven by the technological improvement in manufacturing processes, final energy demand in APS will experience a 5.9 per cent and 3 per cent decrease in the industry and transport sectors, respectively. However, comparison in primary energy consumption by sources between BAU and APS shows only limited energy saving expected in a mid-frame even if a broad range of energy efficiency and conservation measures are implemented as part of structural change. Rather, lower productivity and efficiency might be experienced with increasing transition from natural gas to coal by 2020 as a transition process of sources, and it therefore requires more aggressive policy measures to improve energy efficiency and enhance technological installation of renewable energy. In the meantime, more reliable statistical data are also necessary for an effective policy analysis.

The second speaker, Dr. Sirikum from EGAT, followed the presentation and described how EGAT views Myanmar and their potential cooperation in power trade. Importantly, she clarified that a challenge for Thailand in investing in bilateral power trade with Myanmar, despite the larger potential (39,720 MW) in Myanmar than Lao PDR (26,000 MW), is a lack of G-to-G cooperation which can smoothly kick off the power trade. However, there are a few potential projects planned: for instance, a 119 MW hydro project in Hutgi is already in effect; 390 MW thermal generation in Mai Khot is under negotiation (although the MOU has already expired in PDP); 6,300 MW (10 per cent mandatory deduction from a total of 7,000 MW according to Myanmar regulations) in a hydro project in Mong Ton; and the huge potential coal-fire project in Dawei.

The last speaker, Mr. Hashimoto from PARI, shared possible replicable policy development learned from his long practical experience in Lao PDR and Cambodia as a utility practitioner. For instance, power exports led by Electricit du Laos (EDL) to Thailand’s EGAT have created a mutual reciprocity between the two countries. Similarly, Cambodia manages to meet its electricity demand in its capital, Phnom Penh, by bilateral power trade with Thailand and Viet Nam. Referring to these practical cases, he indicated a few potential benefits for the government in Myanmar: (1) power trade can effectively contribute to energy security by closer interdependence between supplier and consumer countries; (2) power export led by IPP will bring an increase in their foreign reserves while small-scale power import is expected to be effective for electricity supply in rural border areas; and (3) plural IPPs for high-voltage transmission lines further promote not only IPP business, but also rural electrification in bordering areas.

Mr. Rabin from KWR International introduced the ongoing fieldwork activities in more than 50 villages. His exploratory site visits unfolded the further geographical, political, and social features of each local site: (1) social incohesion and unbalanced electricity demand between urban and rural areas; (2) an experimental off-grid installation such as mini-solar/hydropower generation, and its challenges; and (3) an informal cross-border arrangement for power trade with Thailand. In response, Dr. Chutintaranond from Chulalongkorn University provided two major comments on the fieldwork report Mr. Rabin has worked on: (1) energy demand in local communities and purpose of electrification are not sufficiently evidenced; (2) there is a lack of rational on-site selection. Taking these points into account, he emphasized the necessity of capturing Myanmar’s long-term vision.

Led by Professor Yoshikawa’s facilitation, the workshop proceeded to an open-floor discussion on barriers to the win-win power trade relationship. The majority of speakers highlighted institutional barriers as a decisive factor. Dr. Sirikum from EGAT further identified a lack of governmental capacity over the local opposition population and in making environmental impact assessments. Dr. Chutintaranond, Chulalongkorn University, also pointed out the political obstacles in Myanmar, especially the instability and inadaptability in domestic politics, as they are in a rapid transitional political period. Moreover, one of the practitioners emphasized the unsatisfied 'bankable' conditions for power development projects as a critical challenge. Reflecting on these discussions and conclusions, the next workshop in March 2014 will specifically focus on 'institutional barriers' to bilateral energy trade.

Related Links

The Evolving Energy Relationship between Thailand and Myanmar: A View From Thailand (Energy Research Institute, Chulalongkorn University)
Technology Assessment Research Demonstration Project/ERIA Energy Research in East Asia