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Myanmar recently enacted a new Electricity Law (Pyidaungsu Hluttaw Law No. 44/2014 dated 27 October 2014), repealing the outdated Electricity Law of 1984. The long-awaited law seeks to liberalise the electricity sector and ease administrative procedures in hopes of promoting the development of a much-needed modern power infrastructure. Currently, only 30% of Myanmar's population has access to electricity and the Myanmar Government has announced the goal to increase the country's installed capacity from 4,000MW to 20,000MW by the year 2030.
The new Electricity Law moved away from the state monopoly created by the previous law, by explicitly encouraging private investment in the power sector. Going forward, any local or foreign investor wishing to carry out electricity related businesses (including construction, generation, transmission, distribution, utilisation, trading, exchange of electric power, sale of electric power to the national grid, among others) may apply for a permit. The permitting authority for large-scale projects (i.e., projects involving a generation capacity of more than 30 megawatts) is the Union Government, acting through the Ministry of Electric Power ("MOEP"). Regional or State Government offices, including Self-Administered Divisions or Zones, have the authority to grant permits for small and medium scale projects not connected to the national grid. However, the Electricity Law says very little as to the requirements needed to obtain a permit. Rules and regulations will be needed in future to set out the details of the licensing procedure and applicable standards.
Another salient feature of the new law is the formation of an Electricity Regulatory Commission in charge of drawing up the national electricity policy, advising on electricity rates, supervising the drafting of technical regulations and standards, encouraging private investment in the sector as well as monitoring and reporting to the Union Government on the performance of the sector.
As for electricity rates, the new law does not stipulate how rates will be determined. It simply provides that the MOEP may prescribe, with the approval of the Union Government, a suitable electricity rate according to the region. Regional or State Governments, and the Leading Body of Self- Administered Divisions or Zones, may also, in coordination with the MOEP, prescribe electricity rates for power generation and distribution in their respective regional power systems. Notably, the Electricity Law does not explicitly provide that rates will be economically viable and sufficient to cover investment costs. The objectives of the law merely state the intention to "enact fair, transparent and suitable rules and regulations" in order to set electricity rates which are "reflective of modern times".
The Myanmar Government will still have to issue rules and regulations as well as formulate policies to produce a comprehensive legal and regulatory framework for future projects, but the new law is a positive move towards the liberalisation of the power sector.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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