World Bank efforts to increase electrification in Myanmar: Too costly for the poor and the climate

PRESS RELEASE. Myanmar has the lowest rate of electricity access in Southeast Asia at only 44 percent. This leaves more than 35 million people without electricity in Myanmar. Poor communities that desperately need access to energy are also the most vulnerable to climate change impacts. For the well-being of poor communities, energy access goals and climate goals are inextricably linked. The climate crisis dictates that the energy sector must transition out of fossil fuels and into renewable energy as quickly as possible.

In recognition of these facts, the World Bank and the government of Myanmar have committed to achieve the objectives of both the United Nations’ Sustainable Development Goal 7 (SDG7) of reaching universal energy access by 2030 and to the Paris Climate Agreement of limiting global average temperature rise to 1.5°C and making financial flows consistent with low greenhouse gas (GHG) development.

The World Bank, along with the Asian Development Bank, and several bi-lateral donors, is providing significant finance for the first phase (2015-2019) of Myanmar’s National Electrification Plan. A recent review of World Bank operations in Myanmar detailed in a new report by the Swedish Society for Nature Conservation (SSNC) and the Bank Information Center (BIC)-Europe found mixed results for energy access, the poor and the climate.

On the one hand, the World Bank has ramped up much needed energy access assistance to Myanmar with $400 million directed at grid extension, off-grid solutions, and electricity connections. This World Bank and other donor assistance is expected to result in 1.2 million new electricity connections by 2021. However, the new report points to several serious concerns for the poor and the climate.

Anna Östergren of Swedish Society for Nature Conservation: “According to the World Bank, in order for electrification programs to be implemented and sustained, finance needs to be predictable.Thus, it istroubling that the WBG has not committed sustained finance for subsequent phases of Myanmar’s National Electrification Plan.”

Even with World Bank assistance, poor households are expected to pay installation costs that many simply cannot afford. In addition, the World Bank’s gas-focused assistance puts further cost pressures on the poor and significant climate damaging GHG emissions. Even though the Bank is providing $90 million to off-grid renewable solutions, the Bank has provided no finance for utility-scale, grid-connected renewable power. Instead the Bank has given $216 million to two gas power plants (350 MW in total) and is proposing another $280 million for a 300 MW Ywama gas power plant.

Nezir Sinani of Bank Information Center Europe: “The World Bank’s gas-focused assistance is not affordable for the poor. Myanmar does not have enough gas resources to supply the newly built gas power plants and thus, these plants will largely be burning imported liquefied natural gas (LNG).” According to Wood Mackenzie, the conversion of LNG to electricity could increase electricity costs by $1-$2.5 per million British Thermal Units, excluding import costs.[i]

In addition, the production and burning of more gas and the associated increase in GHG emissions is a significant threat to the climate. The global gas sector is the largest industrial source of methane emissions, a potent GHG that in the first two decades has an atmospheric warming effect approximately 80 times greater than carbon dioxide. Furthermore, converting gas into LNG by cooling it to minus 160 °C for transport is a highly energy-intensive and thus GHG-intensive process. No international public finance should be used to subsidise GHG-emitting fossil fuels.

SSNC and BIC-Europe call on the World Bank to:

• Commit adequate finance to sustain an electrification rate of at least 500,000 new household connections per year for 2020-2030 as required under Myanmar’s National Electrification Plan.
• Provide adequate grants to cover electricity installation costs for poor urban and rural households.
• Cancel proposed $280 million for Ywama gas power plant and instead finance five utility-scale renewable energy projects (excluding large hydropower [ii]).

Notes:

[i] Myanmar Times, 2018. MOEE lowers price of electricity meter boxes for residents. March 26, 2018

[ii] lack of precipitation in summer months and climate change induced unpredictable weather conditions make large hydropower a potentially unreliable source of power for Myanmar.