Bank injects power into Myanmar

The World Bank has approved aid for a power plant project in Myanmar aimed at boosting electricity production in one of Asia's poorest countries

  • By Elliot Wilson
  • 10 Oct 2013
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The World Bank Group is setting aside $140 million to help build a new, super-efficient 106 Megawatt (MW) power station in southern Myanmar, in the latest of a series of positive economic reforms by the frontier South Asian state.

Officials said the gas turbine plant, designed to reduce noise and cut carbon dioxide emissions, would cover 5% of the country’s peak energy needs and more than half the electricity demand in the surrounding Mon state, one of the country’s most backward regions.

The World Bank is pushing hard into Myanmar. An initial $80 million grant, provided last year to help boost structural and economic reform, has mushroomed into $750 million worth of credit lines earmarked for energy and infrastructure projects.

“This country is opening a complete new chapter in its economic and political history,” said Axel van Trotsenburg, East Asia and Pacific regional vice president at the World Bank. “For the international community, the question is how we support this story of reform and change.”

Energy is at the heart of this process. Just one in four Myanmar citizens, or around 15 million people, have access to electricity, a number that falls to 16% in rural areas.

“Any modern state that lacks electrification is limited in its ability to grow,” van Trotsenburg added, pointing to the success World Bank has had alongside willing corporate and sovereign partners in Vietnam and Laos, two regional economies further along the development curve.

Twenty years ago just 10% of Vietnam’s population were connected to the electricity grid; that number is now higher than 90%. In Laos, energy connectivity is now running at north of 80%.

World Bank officials hope this is just the start. Myanmar has made enormous strides since first embarking on a path toward reform, reconciliation and a mixed economy in 2010, though it is still only at the start of a very long journey.

A half-century of isolation has left its economy, worth just $53 billion in 2012, in tatters. Per-capita gross domestic product is less than $1,500, one of the lowest rates in Asia. Inward long-term capital investment is desperately needed across the economy, most notably in energy, telecoms, infrastructure, water management, and agriculture.

Van Trotsenburg said the country needs “many billions of dollars of fresh investment” every year, just to get the economy stabilized. Capital is already flowing in from multinationals like the World Bank and its private-sector arm, the International Finance Corporation, but also foreign multinationals from Japan, the US, China and Europe.

“We are not positioning ourselves here to provide a few billion dollars in investment here or there,” van Trotsenburg said. “We are positioning ourselves as a long-term partner, as we have done across East and South Asia. And the long view is already beginning to pay off.”

  • By Elliot Wilson
  • 10 Oct 2013

All International Bonds

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Bookrunners of All Syndicated Loans EMEA

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5 Citi 2.33 17 7.33%