Under the Myanmar Investment Law of 2016 (“MIL”), an energy project with a stated capacity of over 30 MWs is subject to approval by the Ministry of Electricity and Energy (“MOEE”). The Electricity Law of 2014 (“Electricity Law”) requires MOEE approval for any project which is to be interconnected to the national energy grid. To be connected to the national grid, the power project is subject to offtake by MOEE (or a delegated department). There is an alternative, however, that enables sponsors to generate power without requiring MOEE offtake. Pursuant to the MIL and Electricity Law, the generation capacity must be 30 MW or less and the generator shall not be connected to the national grid. Such off-grid generation would then be subject to regional approval and leaves either regional governments or private buyers as the potential offtaker.
This legal framework provides an ideal context for solar projects to develop in Myanmar. For example, it was reported in July 2017 that the Ayeyarwady Region entered into a Memorandum of Understanding (“MOA”) for the purchase and generation of 30 MW of solar power. This generation will not be connected to the national grid and therefore not subject to MOEE approval. Further, a private consumer may purchase electricity directly from the regional government. This means that there are opportunities for the regional government and private consumers to develop their own power delivery standards and parallel markets for the power sector. Consumers, namely those with industrial parks, are willing to pay a premium for reliable, high-quality power delivery to avoid any disruption to operations that may occur when relying solely on power from the national grid. The country has had a long history of load shedding due to lack of adequate supply, with power reliability widely viewed as a key hindrance to investment in industry.
As solar projects can be phased easily into 30 MW blocks, as compared to parsing a 500 MW combined-cycle generator into 30 MW blocks for example, solar power projects serve as an ideal generation source to develop regional power capacity. This is in turn would allow for the provision of more reliable power, necessary for developing industrial zones.
Myanmar appoints new MOEE minister
Minister of the Ministry of Construction U Win Khaing was announced as Minister of the Ministry of Electricity and Energy (“MOEE”) on 2 August 2017, serving both roles. The Minister has a positive track record in the construction portfolio, which incites investor confidence in Myanmar’s power sector. Power developers have reported that they are confident that U Win Khaing’s successful implementation of numerous national infrastructure projects will result in the more rapid development of the domestic power industry, particularly hydropower.
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