The military is the main obstacle to Myanmar’s energy security

OPINION

By promoting off Myanmar’s sources quite than creating its infrastructure, the army has starved the nation of electrical energy and made it depending on its neighbours.

By GUILLAUME DE LANGRE | FRONTIER

There’s a paradox on the coronary heart of army rule in Myanmar. Whereas the army emphasises sovereignty, independence and inner power, its insurance policies constantly weaken the nation and make it depending on others.

That is notably true within the vitality sector. Regardless of Myanmar’s plentiful pure sources, successive army regimes have made it vitality poor, reliant on its neighbours and irrelevant to regional vitality politics. 

Let’s begin with fuel. When the Yadana fuel area was found within the mid-Nineteen Eighties off the coast of Ayeyarwady Area, about one in 10 households had entry to electrical energy in Myanmar. Malaysia, Thailand and Vietnam found fossil gas reserves at across the similar time and used them to construct infrastructure and gas development.

Nonetheless, as an alternative of investing in fuel energy crops and new strains to extend entry like all its neighbours, Myanmar’s ruling army selected to promote 80 p.c of the fuel from Yadana to Thailand, present restricted energy to Yangon, Myanmar’s industrial capital, and ship a lot of the post-tax income overseas. This state of affairs largely repeated itself within the early 2010s with the Shwe fuel area, off the Rakhine State coast, however with the fuel exported to China.

In consequence, by way of energy manufacturing, Myanmar is now 20 years behind Vietnam, 30 years behind Thailand and 40 years behind Malaysia. 

Whereas the income from fuel exports is important, Myanmar’s vitality relationships with Thailand and China are one-sided. The nation fulfils only one.2pc of Chinese language fuel demand and 13pc of Thailand’s demand. Each international locations are additionally lowering their want for Myanmar fuel by investing massively in Liquefied Pure Gasoline port terminals, and China is diversifying its pipeline routes by way of Central Asia and Russia. If obligatory, Thailand might change its Myanmar fuel imports with LNG inside a couple of months. Myanmar, subsequently, depends upon fuel exports excess of Thailand or China depend upon Myanmar fuel. 

Earlier than introducing political and financial reforms in 2011, Myanmar’s generals had locked 80pc of the nation’s fuel manufacturing in long-term export contracts. This meant that, when the financial system subsequently boomed, there wasn’t sufficient fuel and electrical energy to maintain that development. The Nationwide League for Democracy authorities that took energy in 2016 began to import LNG as a stopgap till new home fuel grew to become obtainable. The end result was that, by 2020, the nation was exporting its personal low-cost fuel at long-term contract costs whereas importing overseas fuel at greater and extra unstable costs for its personal wants. 

The identical occurred with hydropower. Within the late 2000s, three massive dams – Shweli-1, Dapein-1 and Chipwe Nge – had been authorized and in-built Kachin State to produce China. Within the authentic contracts, Chinese language corporations would finance the majority of the initiatives and Myanmar would have a proper to solely 8-20pc of {the electrical} output.

However this was only the start of the nice giveaway of Myanmar’s vitality sources. The following step was to plan a cascade of seven dams in Kachin, recognized collectively because the Myitsone dam undertaking, and a string of mega dams on the Thanlwin River. Though by no means accomplished, the dams would export a minimum of 85pc of their output to China and Thailand. The truth that three quarters of Myanmar’s inhabitants didn’t have electrical energy wasn’t a priority. 

Through the failed democratic transition of 2011-21, this apply of promoting off Myanmar’s vitality for scraps was briefly halted. Myitsone was suspended and the federal government as an alternative centered on growing native provide and constructing hundreds of kilometres of energy strains. Energy plant capability and the variety of grid-connected households each doubled throughout that point.

From 2016, the brand new NLD authorities additionally tried to repair the army’s previous errors. As an illustration, the 2007 contract for A6 off the Ayeyarwady Area coast, essentially the most promising offshore fuel block since Yadana, didn’t assure any fuel for home consumption, so the NLD negotiated a 25-35pc share for Myanmar. It additionally renegotiated the export contracts of the three dams in Kachin, so they’d hold a lot of the manufacturing for home use. For the primary time, Myanmar’s vitality coverage was about offering vitality to Myanmar.

For the reason that February 2021 army coup, junta chief Senior Normal Min Aung Hlaing has resumed promoting off Myanmar’s sources and weakening its vitality safety. In June final yr, he authorized the big Hatgyi dam on the Thanlwin in Kayin State. If accomplished, 90pc of the electrical energy can be bought to Thailand, at a time when Myanmar’s energy scarcity is so acute that industrial zones needed to shut down 12 hours per day throughout this yr’s March-Could scorching season. The remainder of the export-oriented mega dams are additionally again on the desk.

In the meantime, all however a handful of minor domestic-oriented initiatives are at a standstill because the junta finds new methods to scare off overseas and native buyers. The most important infrastructure undertaking authorized for the reason that coup, a US$2.5-billion China-Myanmar LNG undertaking, hasn’t progressed in 18 months. A young for 4 dams in Tanintharyi Area needed to be reissued for lack of proposals, whereas the prospects of most different dam initiatives are dim as a result of they’re in areas the place the army can not assure secure entry to corporations. As well as, a young for 18 photo voltaic initiatives attracted solely two bids, in comparison with 50 bids obtained for the same tender earlier than the coup, in 2020. 

This lack of progress implies that Myanmar has carried out a uncommon feat, going from being one of the vital promising creating international locations for renewable vitality to one of many solely international locations on the planet the place electrical capability declined final yr. Even the closely fortified capital Nay Pyi Taw has had unprecedented energy cuts this yr, whereas army bases across the nation have needed to depend on turbines. 

With respect to fuel, the army has created a lot instability that new area developments have been placed on ice, which can have long run penalties. French vitality large TotalEnergies and Australia’s Woodside have pulled out of the A6 offshore block, whereas Thai firm PTTEP says its promising M3 block in Ayeyarwady, destined for home consumption, “is awaiting growth because of the political situation in Myanmar”.

With out these two important initiatives, Myanmar’s fuel output will fall by 49pc by 2025 and 80pc by the top of the last decade. In brief, the coup is making a decade-long vitality and public finance disaster.

This disaster reveals that, for all of the regime’s isolationist rhetoric, military-run Myanmar is something however impartial. It can not fund its public sector with out fuel revenues from Thailand and China. It can not restock its petrol stations with out Russian oil. It can not develop new fuel fields with out Thailand’s assist. It can not construct new energy crops with out Chinese language and Thai banks and engineers. It can additionally quickly be compelled to import energy at a premium from China and Laos. 

It’s comprehensible that neighbouring international locations would make some use of Myanmar sources to construct their very own vitality safety, however trying again on six a long time of vitality information, there is no such thing as a proof that the army ever tried to do the identical for Myanmar.

The unhappy irony is that Myanmar may very well be an vitality powerhouse and wield great geopolitical affect inside Southeast Asia. As a substitute, it’s principally irrelevant to the area’s vitality politics. Technology after era of army leaders have weakened the nation’s vitality safety a lot that each evening, when considered from passing airplanes, Myanmar is that darkish, seemingly empty area in between its neighbours’ lights.

Guillaume de Langre is a former adviser to the civilian authorities and Myanmar vitality knowledgeable.