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December 14, 2019

Change in electricity bill payments, and their view

By Shin Min

Professor Dr Aung Tun Thet, Deputy Minister for Electricity and Energy Dr Tun Naing, General Secretary of Myanmar Garment Entrepreneurs Association Daw Khaing Khaing Nwe, Miss Universe Myanmar (2016) Htet Htet Tun and U Ko Ko (Sethmu Tekkatho) took part in the talks on change in electric fee, and their view. MTRV aired the program, and the following are their discussions:

U Ko Ko (Sethmu Tekkatho): There are people who welcome or criticize the rise in power charges, that began on 1 July 2019. Some say the measure is appropriate, but some are concerned about it. Please, your comments, Deputy Minister.
Deputy Minister: Myanmar produces electricity from hydropower plants and gas plants. There is production cost. The government also buys power generated by private companies. So, there are two kinds of cost – the cost of producing power and the cost of buying power – in electrifying the nation. But the government is selling power to the people at a lower price than the cost. So, the government uses large about of sums from its budget to subsidize the public power supply annually. The amount of subsidy grows together with the increase in public power distribution. Currently power is distributed for 45 percent of the population, up from 34 percent in 2016. So, we have to increase power generation for the remaining 55 percent.
We need extra budget for additional power distribution facilities and buying power from the private sector. The government’s funds for other development programs will dry up, if the subsidy goes up too high. So, it my view, the time has arrived to increase the power fee. We have made detailed calculations in raising the electricity rates.

U Ko Ko (Sethmu Tekkatho): The Deputy Minister has supported the program. What is your economic point of view, Dr Aung Tun Thet?
As mentioned by the Deputy Minister, there is the sector of government subsidy between the overall production cost and the selling price. From the economic point of view, the ministry announcement of the price hike is just a part of the reforms. Normally, every country or institution reviews the subsidy every five years. After a review of the matter in 2014, the rate was fixed at a reasonable level. Both the views from the economy and political economy show the price hike as an appropriate measure.
A new program or policy may be beneficial, but it may also have disadvantages. But the point here is who gets the most benefits from the price hike program. In my view, it is the rich. They can pay for every electric apparatus that use. But the program may like marginalizing the grassroots. So I hope the government will channel the funds for subsidy into the funds to address the plight of the persons who have no electricity at all. In this way, the program will be less critical.

U Ko Ko (Sethmu Tekkatho): Dr Aung Tun Thet discussed the matter from the economic angle. But there may be adverse impacts like the sharp rise the production costs of other sectors resulting from the price hike. So, entrepreneurs may worry about the program. So, your comments please, Daw Khaing Khaing Nwe.
Daw Kahing Khaing Nwe: I feel a missing part between the cost and the price. I appreciate the burden of the government in providing the subsidy. Under the new price, a business using 20,000 units will see 37 percent increase it its electricity bills. On the other hand, there were blackouts. Our electricity bills went up every time a power outage occurred as we had to generate alternative power from diesel generators during the time. So, as a responsible citizen, I would like to tell the government “OK go on, with your price-hike program, but no more blackouts, please.”
My message is that every power cut pushes up the production coast of entrepreneurs. Likewise, families may also face a rise in their power bills, as they too have to ignite the mini generators during the power failures. So, this matter should be addressed, as it is a challenge for the government.

U Ko Ko (Sethmu Tekkatho): As a candidate at the municipal elections, the current Miss Universe Myanmar and a public member, please express your view.
Htet Htet Tun: It is natural that people will be against every price hike. So, they may have expectations as well as questions. They want to know what they will get.

U Ko Ko (Sethmu Tekkatho): Deputy Minister, Sir, what benefits will the price hike likely to bring? How will you prevent the occurrence of blackouts?
Deputy Minister: First, we need to generate more power. When our government was formed, only 34 percent of the population gets electricity. We have plans to raise the number to 50 percent at the end of this year, and 55 percent in 2020. Additionally, we are encouraging local investors to participate more in the power generation sector. So, we are also trying to develop the power supply sector to further facilitate the functions of the entrepreneurs. The power demand is rising, and to meet it we must produce more electricity. Entrepreneurs selling electricity to the government cannot tolerate any financial losses. So the government has to buy from them at the prices fixed in their favour. So there is a significant gap between buying price and selling price. There cannot be sudden changes, or quick benefits. The investors will assess the government’s ability to buy their products. They want assurance for the business. They understand the government’s burden of subsidizing the prices and in buying power at their favourable prices for a long time. So, more investors may appear, if the government does not need to use funds from its coffers anymore for further subsidization. It is the answer to industries.
As for the general public, we promise the best efforts to prevent of further blackouts from occurring. We need quicker response for the public. But there are some constrains on our part because of the subsidy that is drying up our funds for other projects. So, if there is no subsidy, we can allot more funds for staff employment, training, equipment and services.
Translation: TMT
To be continued

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