Myanmar’s crippling power outages are threatening the economic recovery of the conflict-ridden Southeast Asian nation, where a military coup in 2021 left the country struggling to source fuel for gas-fired electricity plants.
(Bloomberg) — Myanmar’s crippling power outages are threatening the economic recovery of the conflict-ridden Southeast Asian nation, where a military coup in 2021 left the country struggling to source fuel for gas-fired electricity plants.
In the commercial capital Yangon, planned electricity cuts doubled in duration to eight hours a day in April, according to David Thoo, an analyst at Fitch Solutions unit BMI. That’s constraining manufacturers, S&P Global Market Intelligence said in a separate statement.
The country, which exports natural gas to Thailand and China, depends on imported liquefied cargoes of the fuel to power its own cities but has struggled to do so since the military junta seized power in a 2021 coup. Multiple rounds of sanctions by the US and its allies to scuttle the regime’s efforts to generate revenue and procure arms have sapped the nation’s foreign-exchange reserves, leaving it with little to pay for fuel.
That’s crippled power generation, a situation that’s been exacerbated this summer by low water levels causing reduced hydropower output, and made shortages a part of daily life. Electricity output dropped almost 30% from October 2021 to March 2022, according to the US International Trade Administration.
The blackouts are a concern for economic growth, which the World Bank earlier this year pegged at about 3% for the year ending September. Prolonged outages risk constraining manufacturing, a sector that accounts for a quarter of the economy, and in turn threatens to push more people into financial hardship in a country where about 40% of the population already lives below the national poverty line.
Companies are serving new orders for goods using existing inventories, but stockpiles are dwindling rapidly, putting the economic rebound from the pandemic at risk, according to an S&P Global report dated May 2.
Satellite imagery from NASA Worldview shows that by November, blackouts had spread over central Myanmar, while street lamps along major highways connecting Yangon to townships further away vanished.
LNG imports, which started trickling into the country in 2020 into the Yangon area, stopped in 2021 after the coup, according to shipping data compiled by Bloomberg.
State broadcaster MRTV has blamed opponents of the junta for the darkened streets and homes. Power cuts grew worse in July last year when the People’s Defense Force blew up the Zawtika gas pipeline, while also damaging a power transmission line. Attacks still continue to target the grid.
The dire situation has led members of the Myanmar Industries Association to hold an emergency meeting on how to improve access to electricity, according to people familiar with the matter. Factory owners are considering seeking the Ministry of Electric Power’s help in importing LNG, said the people, who requested anonymity as they were not authorized to speak to media.
Factories typically can’t depend on diesel generators, because obtaining the fuel is expensive and they overheat after a few hours.
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