The slow road to universal electrification

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Recurring power failure that runs up to four hours still plague Yangon and other parts of the country. Despite the monsoon season when water is more than enough to flood hydroelectric dams, no change was felt. Deficit in power supply continue to increase and humungous generators remain relevant.

The energy problem is one of the key factors that limit the growth of the country. Growth and competitiveness cannot be maintained without addressing the power problem, especially at this time when the global economy is slowing down. With the country’s development plan hinged on exports and industrialization, special economic zones and industrial zones will not be sustained if the energy supply cannot cope with the growing demand.

No movement on since the Myitsone

The present source of power is mostly from ageing hydroelectric generators. The series of dams proposed to be constructed during the time of the military regime hit a snag with the suspension of Chinese-financed Myitsone Dam. The biggest among the proposed dams, a big chunk of the output will be consumed by its financier, and that does not sound good to the people who were uprooted to give way for its construction. Since the suspension, no major dam construction was initiated and the power deficit remains, leaving the power sector in limbo.

Blessed with big rivers crisscrossing the country, hydroelectric dams can ideally address the power needs. However, the cost of constructing a new one is staggering and it requires several years to build. China offered financing but wanted the power generated for its own use, to feed its own industries.  Myitsone remains unsettled with the Myanmar government keeping it suspended, while the Chinese government is pushing for its resumption. The Chinese are demanding for refund of the initial cost spent which runs to hundreds of millions of dollars, if the dam will be scuttled.

Dams also comes with it controversies – displaced communities, environmental degradation and corruption from all levels.  Affected people raise issues whenever plans for dam construction are proposed, and even when relocated, people take a long time to settle. In most cases, force is employed in response to people’s protest giving the state a bad image in the international community.

Tapping oil and gas

Another natural resource that can be tapped is the oil and gas industry. The Andaman Sea is rich in liquefied natural gas (LNG) that can be used as fuels.  Extracting gas from offshore deposits will not affect communities and state-of-the-art technologies minimize the environmental impact of the drilling.  The drawback is the cost, with the price of oil and gas at a low point.

The current companies in partnership with the government to extract oil and gas are PTT, Total, Daewoo and Petronas. More players are betting on the potentials of the industry in the oil and gas sector. One of the new entrants is the Canadian Foresight Group (CFG), a Singapore-registered company awarded with the M15 block at the Andaman Sea in 2014. Initial tests showed the presence of a large gas deposit.  The company is completing its tests and studies and projecting they can start production soon.   Ms. Perla Woo, Vice President of the CFG, expressed, “The volume of gas in the offshore block awarded to us is huge. Once extracted, our production will contribute to the efforts at addressing the energy needs of the country.”

Alternative energy sources in the market

Some alternative power sources are now available in the market although most still requires high investment. Solar energy is now produced in commercial quantity with the price of panels continuing to go down. Thailand and the Philippines are among the ASEAN countries with developed commercial solar producers selling to their respective national grids.

A Thai company is currently pilot testing a solar farm in Myanmar. World Bank is also supporting an electrification project to distribute solar power systems in remote areas far from the national grid. These initiatives contribute to a more affordable power source especially for those in the remote areas.

Wind is another energy source that can be tapped and developed.  The technology may not be available in the country at present but it can be considered as part of the energy portfolio of the country. In the Philippines, wind farms are commercially operating giving motivation to private investors to develop more.

Other renewable energy sources like bio gas, rice husk and garbage can also be considered even at a smaller scale.  But it seems talks of diversifying the energy source is still just that – talks. Investors are not gung-ho in filling up the demand because there is not much incentive for them to plunk their money to the energy sector.

Going for the cheaper option

The government expressed a different perspective. Daw Mi Mi Khaing from the Department of Electric Power Planning stated that the government is considering clean coal as an option for the government to pursue. Coal-powered plants can be set up easily and the price of coal in the market is quite low, a factor highly considered by the government.

The price of coal may be low compared to other fuels available in the market, but coal is not environment friendly. Coal-powered generators spew toxic fumes that pollute communities around it.  Just like the problem with dams, operations of coal-powered generators will breed resentment from the people as it will affect not only their livelihood but their health as well.

In the end the cheaper alternative may become more costly when social and health impacts become evident, and the government will have to spend again to address these problems. It will take more time, money and effort to reverse the negative effects of pollution than to prevent it in the first place.

Deciding and acting fast

The government should thoroughly weigh the options it will pursue, and it has to act fast. Power is needed to sustain the economic development of the country. The country has to think of the fastest and most appropriate response it can provide.  While deciding on the quick fix, parallel efforts should be made to consider other renewable energy sources and start investing in them.  Current initiatives should be expanded with participation of   communities that will use them.

A good mix of sources should be assembled to provide affordable prices and ensure profitability and competitiveness for industries particularly the small and medium enterprises.  It should also be affordable to ordinary people.

Funds may be the main reason why the government seemed to be slow in addressing the power conundrum. To achieve universal electrification, the government needs a lot of money. With a present debt burden of $22.7 billion, the government will be hard up to pursue  setting up new and upgrading  current power sources from its own funds. Additional borrowings will entail balancing the provision of power to keep the economic growing and servicing the debt burden.

Private investment can be invited to pour their money into the sector. Luring investors however will require tax privileges and other incentives for them to come to the country. Tax privileges limit the country’s ability to collect income from a profitable industry.

The government remains in a bind to design a framework to entice investments to the power sector. The dream it to have the ideal price of electricity necessary to create the environment to encourage economic activities to flourish and contribute to the country’s sustained growth.

 

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6 Topics for Effective Financial Literacy Program

ImageBorrowing is an essential part of modern living. From the credit cards of urban residents to the rural neighborhood moneylenders, financing is needed for emergency situations, household consumption and even capital for income-generating activities and small businesses. The availability of lending sources and the easy access to some of these sources pushed some people to have multiple loans, over-indebtedness and financial ruin.

 It is in this context that financial literacy becomes relevant. People need to be educated to become prudent and to acquire skills in managing their finances. Effective financial literacy programs are composed of two sets of topics. The first set are those that advocates change in perception and the other set are those that teaches skills in managing finances.  Among the most relevant financial literacy topics are the following:

 1. Defining Life Goals. Setting life goals allow people to have something to hope for. A reason to work towards a target objective.  It helps when the goals are visualized with actual pictures of one’s dream house, business or any other thing.  Some people tend to work hard more with a visualize dream.

 2. Acquiring the Money Mindset.  The shift in perception is the main focus of this topic. Among the subjects covered are: valuing money, identifying the best role model in financial management and learning the mindset of people with money.

 3. Budgeting as a Coping mechanism. This topic covers the basic skills in computation – identifying assets and liabilities, income sources and expense items and determining net worth. Only when the person got hold of his basic financial circumstances can he start working to improve his financial condition.

 4. Savings. With a budget as a guide, savings skills are shared. The skills in regularly setting aside portion of the income are emphasized. Practical tips are discussed to make it a habit.

 5. Preventing Over-Indebtedness. Responsible borrowing is covered in this topic, answering the basic questions of why, when and where to borrow. Other subjects include defaults, its causes and consequences. The most relevant topic is the discussion on how to get out of debt.

 6. Retirement Planning. What to do when one cannot earn anymore by reason of age?  Preparations for the time when one is retired and setting up a nest egg culminates the financial literacy course.

 For clients of microfinance institutions, these topics are the most appreciated and most requested.