Find out why IFC's country manager for Myanmar thinks its electrification targets are challenging

Vikram Kumar admits public resources are way too meager to meet targets.

In Asia, 700 million people live without electricity. To meet Asia’s growing energy demands, hydropower projects in the Mekong region are developing fast. In Myanmar alone, hydropower potentials top 100MW – the region’s highest. If realized sustainably, the energy produced could benefit 34 million people, or about 66 percent of the population that currently live without access to electricity. This is coupled with Lao People’s Democratic Republic’s energy generation potentials, which could bring electricity to nearly all rural households by 2020, drive business growth, and generate income to reduce poverty.

The challenge, however, is to develop this natural resource sustainably. Asian Power recently caught up with International Finance Corporation's country manager for Myanmar Vikram Kumar as he discussed where Myanmar is right now in meeting its targets.

World Bank says Myanmar's hydropower potential is as much as 100MW. What's been blocking the country from fully harnessing its resources?

Vikram Kumar: Tapping into Myanmar’s hydropower potentials requires more than a flip of a switch. Technical challenges to the sector include issues surrounding procurement of projects, project allocations, the need for improved project documentation and tariff structures, among others.

Environmental risks, land use and water rights, coupled with social issues are of particular concern, which we are addressing through our work. Additionally, sound policy and regulation will provide Myanmar with the foundation it needs to sustainably harness its water resources. That’s one reason IFC is here to help.

In September 2015 we started working with Myanmar’s Ministry of Electricity and Energy and the Ministry of Natural Resources and Environmental Conservation to help build a more sustainable hydropower sector. Key to our common vision of sustainably harnessing Myanmar’s water resources is building the needed capacities among officials from both ministries. We have been ramping-up our efforts offering regular trainings on environmental and social risk management, good international and industry practices and technical topics including environmental flows of hydropower dams.

What we know is that we need to know more about the risks of hydropower development in Myanmar’s river basins. Coupled with these risks is understanding how hydropower effects communities that rely on river resources. If we understand the risks and engage stakeholders effectively, we will be able to develop more sustainably. This is why IFC and the Myanmar government will soon launch the first country-wide Strategic Environmental Assessment. This extensive assessment will shed light on the river basins that would be ideal to develop sustainably, and those which need for example, to be conserved. Better knowledge on hydropower and its impacts will support the government with strategic decisions on where and how to construct as well as the economic viability of projected projects.

Myanmar has ambitious hydropower targets but is always plagued by project delays and still remains to be among the least-powered countries in SEA. Given these, is it still possible to achieve the nationwide electrification target by 2030?

To achieve nationwide electrification targets by 2030, we are going to need to focus on ramping up grid connectivity and accessibility. At the moment, two-thirds of the population is not connected to the national electricity grid, and 84 percent of rural households lack access to electricity. These numbers are challenging, considering that only 200,000 customers were connected in 2013. According to the National Electrification Plan, Myanmar needs to increase this number to 500,000 new connections a year until 2030.

We know that public resources aren’t going to make ends meet to finance all the needs of Myanmar’s power sector. Driving private sector investments to help develop the sector sustainably is key and will also help improve the sector efficiently.

With its vast water resources, hydropower is central to Myanmar’s energy mix. But with this said, tapping other renewables will also help Myanmar achieve its goals.

When it comes to sustainability, Myanmar still has a long way to go in hydropower. What is lacking in Myanmar's hydropower sector so that this may be addressed?

Vikram Kumar: Sustainability requires strong leadership. Leadership in hydropower companies will ensure better environmental and social systems are in place improving business operations; leadership in financial institutions will ensure the right investments are made to the highest quality companies; and officials having the know-how and tools to address challenges is key for long-term sustainability.

In Myanmar, resource sharing needs to be improved to local stakeholders benefit as well. Through the SEA process we will work to engage key stakeholders including civil society, local NGOs and thought leaders on what sustainable hydropower means and how we’re going to achieve it.

When we talk about hydropower, one project does not operate in isolation. We need to think of how all development effects river basins. By changing our lens from a project-to-project to a basin-wide or cumulative perspective, we will be closer to achieving a more sustainable hydropower sector. As we have learned from our experiences in South Asia, for example, public-private sector cooperation and a commitment to improve governance in the hydropower sector will enable all stakeholders to play a role and ensure inclusivity and accountability and will promote sustainability from a basin-wide approach.

Myanmar has been inviting other international firms to invest and help develop hydropower but only a few are convinced. How should Myanmar address this and consequently drive change in the hydropower sector?

Vikram Kumar: A more sustainable hydropower sector – one with solid environmental and social guidelines, will definitely help improve the investment climate here in Myanmar. International investors evaluate the reputational and financial risk before entering an emerging market such as Myanmar. Myanmar has potential to create a competitive market place for hydropower investors that values sustainable business operations. IFC is helping by financing and mobilizing the capital needed for private sector projects that will support Myanmar’s economic growth. When we review a project for financing, we want to see how it plans to share its resources, and how it will achieve the good international practices IFC represents.