Will Myanmar's ballooning power sector be badly pricked by project delays?

Its potential may be marred by these threats.

Investors have been itching to inject assets into Myanmar’s power sector and its growing pipeline, but project delays are threatening to dim the industry’s bright future.

Myanmar’s potential will not be fully realised given the ongoing challenges to project realisation, particularly for coal and hydropower projects. Georgina Hayden, senior commodities analyst, BMI Research, says, “The realisation of gas-fired power facilities has a stronger track record and we expect gas to gradually gain share in Myanmar's power mix. Thai companies are becoming increasingly active in Myanmar's power sector, as the government looks to secure electricity supply from neighbouring countries via imports.”

Myanmar's power deficit is pressing and there is significant untapped demand. Positive demographic fundamentals, limited electrification rates and the growing economy will drive power demand across the country, ensuring that Myanmar will be one of the fastest growing power sectors - in terms of consumption - in the Asian region over our 10-year forecast period, Hayden adds.

Kee-Yung Nam, principal economist, ADB agrees that Myanmar has a big power potential waiting to be unleashed despite delay threats. “Based on the 2010 levels of power infrastructure stock, demand will increase 1.9 times in 2020 and 7.8 times in 2030 under the low GDP growth scenario and 2.4 times in 2020 and 10.3 times in 2030 under the high GDP growth scenario.”

It is important for the country to develop innovative financing mechanisms and modalities to be able to fund these huge requirements, since Myanmar may not be able to mobilise domestic resources to fund these projects.

“This is why private sector financing is very important. To attract private sector financing, these power projects need to be translated into financially viable and bankable projects. At the same time, the government is responsible for ensuring that policies and the regulatory environment remain stable, and institutions that manage these infrastructure sectors such as power are able to efficiently contribute to the country’s output,” Kee-Yung Nam adds.