Myanmar: Power Distribution Improvement Project

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Lessons

A minimum of one year has to be allotted to power distribution rehabilitation works.

This project’s original schedule set the completion date at December 2016, 24 months ahead of the envisaged loan closing date of December 2018. This deviated from the ADB norm of allowing projects to be completed 6 months before the loan closing date. Given that the procurement activities were set at appraisal to be completed by June 2016, the project implementation period allotted in the loan documents would boil down to only 6 months. Notwithstanding that the project closed on time, the oversight in its overall schedule needs to be avoided in future projects. Six months was clearly insufficient to complete all the rehabilitation works under the project. Allotting a minimum of 1 year for such rehabilitation works would be more realistic.

Project Cycle Stage:

Preparation

Implementation

Early and/or timely engagement of key experts is critical to ensure project compliance with loan covenants.

Myanmar’s accounting and auditing profession has limited exposure to international practices, and the requirement for audit reports and management letters to be in English was a major challenge during the early stages of this project. The situation was remedied only after two financial experts were mobilized under a technical assistance for a subsequent project to assist in improving the implementing agencies’ (IAs) financial management and reporting capacity. In parallel manner, while the loan agreement contained all the necessary environmental loan covenants, a safeguard compliance status review conducted during the project midterm review found that little effort had been made to comply with said covenants. The problem was deemed rooted in the IAs’ failure to appoint an environment staff or hire an environment consultant for the project. Performance improved only after the appointment of an environment staff in each of the IAs’ project management units. The project experience highlight the critical importance of the early and/or timely engagement of key experts, staff, or consultants, to ensure compliance to loan covenants. Agreements in support of this need should be worked out during the processing stage.

Project Cycle Stage:

Preparation

Implementation

Background

At project formulation in 2013, the power supply condition in Myanmar was very poor. Electrification was only 28% in 2012, growing at a very slow rate from 16% in 2006. Power supply capacity was inadequate, especially during the dry season, resulting in persistent power outages. Ageing infrastructure and overloading of the power network also caused very high transmission and distribution systems losses.

The situation impacted negatively on economic and social development. Therefore, the government requested the Asian Development Bank (ADB) to support the rehabilitation of the power distribution network in the key supply areas in Myanmar. In response, ADB approved a $60 million loan for the Power Distribution Improvement Project in December 2013. The project was to focus on reducing system losses in the distribution network and subsequently increasing electricity supply to support inclusive and sustainable economic development.

The project’s envisaged impact was reduced power distribution losses and improved energy efficiency. Its expected outcome was improved infrastructure providing reliable and sustainable electricity to the project townships and districts. Its intended key outputs were rehabilitated distribution networks in (i) five townships in Yangon region, (ii) four districts in Mandalay region, (iii) five districts in Sagaing region, and (iv) two townships in Magway region. As this was the first loan to Myanmar since 1987 and after ADB’s reengagement in 2012, the project scope was carefully selected to focus on high-impact areas to reduce power system losses and enhance system capacity. The project locations hosted the most overburdened and critical networks in the country.

At completion, the project achieved its planned outputs, mostly in excess of what were set appraisal. It exceeded all its targets in Yangon, Sagaing, and Magway, although it fell short in one of its targets [upgrading of 33/11 kilovolt (kV) substations] in Mandalay. During implementation, the project scope also expanded to other neighboring townships and districts, covering a total of 45 townships in Yangon, seven districts in Mandalay region, seven districts in the Sagaing, and nine townships in Magway. In addition, the work scope included both the replacement and upgrading of conductors, transformers, and other elements such as ABC conductors, substation equipment, and concrete poles. Higher capacity conductors and transformers increased the system capacity and greatly reduced losses. The expanded scope of each output was mainly made possible by utilizing loan savings from the lower bid prices that resulted from international competitive bidding and the cancelation of two procurement packages financed instead by the government.

The mostly successful and greatly expanded output deliveries improved the distribution network operational conditions and reduced the number of overloaded elements, enabling better quality and reliability of electricity supply to customers. Rehabilitation works with the conductors, transformers, and other network elements with appropriate capacity and specifications made them more efficient and reduced technical losses and also provided better protection against illegal connections. With the planned outcome fully achieved, the project has significantly contributed to improving the productivity, efficiency, and quality of life in the project areas.

The Ministry of Electricity and Energy was the executing agency and the Electricity Supply Enterprise and Yangon Electricity Supply Corporation were the implementing agencies.

Project Information

Project Name:

Power Distribution Improvement Project

Report Date:

December, 2020

Main Sector:

Energy

Country:

Myanmar

Project Number:

46390-003

Report Type: