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In two short years, a reform movement led by ex-generals has transformed a junta-run backwater into Asia’s new investment attraction. But there's a catch. Yangon is no ready-made Shanghai. Long neglected, the country's infrastructure leaves much to be desired. And many of the resources that make Myanmar so compelling in the first place lie in the jungle under the careful watch of guerrilla fighters. Still, the companies have come, and the money is flowing. Cue the gold rush. GlobalPost's Patrick Winn investigates.

Myanmar 2012 6 22
Myanmar demonstrators light candles and pray during a candlelight protest against severe power cuts at Sule pagoda in Yangon on May 24, 2012. (Soe Than WIN/AFP/Getty Images)
Asia-Pacific

Myanmar’s real power struggle? Keeping the lights on

An electricity famine may strangle Myanmar's economic revolution.

YANGON AND KAREN STATE, MYANMAR -- Forget the abusive generals and the freedom fighters. Myanmar’s new power struggle pits the frustrated masses against their nation’s lousy electrical grid. Myanmar’s government is attempting a light-speed transition from paranoid dictatorship to free-market democracy.

But as it zooms ahead, the Southeast Asian nation is also struggling to keep the lights on. By the World Bank’s estimation, a scant 13 percent of the population has access to the national power grid. Even North Korea and East Timor boast higher rates.

Those fortunate enough to have electricity contend with exasperating, near-daily blackouts. In the poor and unplugged hinterlands, flashlights convey status. The power shortage is a blight on progress that grinds factories to a midday halt and forces rural kids to study by candlelight.

Myanmar’s president, a reformist ex-junta general named Thein Sein, has just announced a wildly ambitious goal: tripling per capita GDP to $3,900 in five years. American and European investors, recently cleared to return after a 15-year spell of sanctions, are hoped to help revitalize the long-suffering nation. But without an expanded and modernized power grid, Myanmar’s economic revolution may fail.

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This truth appears well understood in the nation’s new halls of power. “Investment is very important but we have a weak point: electricity,” Kyaw Zaw Maung told Global Post. He is the head of Myanmar’s Directorate of Investment and Company Administration, an agency responsible for approving foreign projects. “We need high-tech technology, we need investors and America is very advanced,” Kyaw Zaw Maung said. “Come to Myanmar.

We welcome you to improve our power supply.” There is a painful irony surrounding Myanmar’s electricity famine: the country, formerly titled Burma, is replete with oil, gas, hydro-power dams and coal. But much of the power generated by its 30-odd power plants is zapped abroad to fridges and TV sets in neighboring China and Thailand. Both nations have financed and constructed power stations inside Myanmar and they are set to build more.

On government balance sheets, energy-related projects account for a whopping 83 percent of foreign investment pledges and total $26.2 billion. Though China is the frontrunner, firms with claims on varied Myanmar gas fields include Russia, India and Switzerland.

Even throughout the era of sanctions, France’s Total and American’s Chevron built and ran a pipeline off Myanmar’s coast. Both ducked sanctions through grandfather-clause loopholes.

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That foreigners are piping out much of Myanmar’s power is not lost on its citizens. In a country notorious for daring protests and ensuing bloody crackdowns, locals have used their newly restored assembly rights to agitate for more electricity.

Frustration over May blackouts sparked a demonstration in Yangon, the commercial capital, that ended in light scuffles with police. But farther afield, Myanmar’s energy policy is caught up in outright armed conflict. In northern Kachin State, a simmering civil war between state forces and the indigenous Kachin Independence Army has threatened billion-dollar Chinese dam and gas pipeline projects.

In eastern Karen State, the claimed turf of the guerilla Karen National Liberation Army, commandos encamp by a river the Myanmar and Thai governments have attempted to dam. “They started running surveys here and I told them, look, you must negotiate with us first,” said Brigadier Gen. Baw Kyaw Heh, commander of the liberation army’s fifth brigade.

“The villagers didn’t want the dam to flood their land,” the commander said. “So I moved in my troops to claim the area.” The project remains in limbo. Myanmar’s Solar Craze Downtown Yangon hosts an old-world throng of vendors, all noisily beckoning passersby towards goods arranged on dirty pavement. Rambutan, a spiny, magenta-colored fruit, competes with sliced pineapples.

Used watches compete with English-language technical manuals from the 1970s. Men chew the city’s favored stimulant, betel nut, and spit crimson saliva into the drain. But just up the block, the “Power Light” shop showcases more contemporary wares: Chinese-made solar panels.

For a few hundred bucks, a small fortune in Myanmar, buyers can install their own personal energy supply outside their homes. The cheapest model, a $60 hand-held unit, contains a jack to charge an increasingly common gadget in Myanmar: mobile phones.

“We’re selling more and more solar panels. But not much to city people,” said Kyaw Phyoe Khin Aung, a 30-year-old shopkeeper at Power Light. “Mostly people buying it and taking it back out to the villages.” Slick panels have become a jarring new sight in off-grid villages. In Karen State hamlets, where buffalo munch grass and children toddle half-naked by the rice fields, the panels feed droopy wires into bamboo huts. By day, solar power is captured inside car batteries. By night, the batteries power radios and lightbulbs.

Light remains a highly sought luxury in much of Myanmar, said Debbie Aung Din, co-founder of a Yangon-based non-profit called Proximity Designs. The operation harnesses Western designers to develop high-end tools, sold at cost, that boost Myanmar farmers’ productivity.

The top seller is a line of irrigation pumps, powered by Stairmaster-style pedals, that save farmers countless hours hauling buckets from a stream. But last month, Proximity rolled out a new product: the D-Light. Designed in part by Stanford University graduates, the solar-powered lantern has the smooth, minimalist aesthetics of an Apple gadget.

It sells for about $11 and, like its $60 Chinese-made counterpart, includes an outlet for charging mobile phones. Nearly 2,000 units have sold in the first four weeks. “Families really value education.

They spend a lot of money on candles so their kids can study at night,” Debbie Aung Din said. But even candles, which sell for 25 cents, can eat up one quarter of a family’s daily income. “It’s not ideal. Thatch huts are drafty ... and you can’t study by candlelight inside a mosquito net.”

“After an hour, when the candle goes out, they just sit in the dark,” Debbie Aung Din said. “Just imagine how much that hurts their productivity.” Foreigners First? As power shortages strangle the economy and breed dissent, Myanmar’s leadership is beginning to see stronger links between energy policy and social unrest.

“Yes, I get these questions. Why do we export energy to neighboring countries when we have a shortage?” said Aung Kyaw Htoo, assistant director of Myanmar’s Ministry of Energy. Previous natural gas projects, he said, were inked with foreigners before Myanmar’s energy needs spiked.

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“At those times, we had no domestic concerns and the operators and buyers already had agreements,” Aung Kyaw Htoo said. “Therefore, we exported the gas.” “But today, in reforming not only politics but our economics ... the local demand is abruptly higher,” he said. Though natural gas remains Myanmar’s top source of foreign income, it quenches only 30 to 40 percent of domestic demand, according to government figures.

According to Aung Kyaw Htoo, the energy ministry has agreed that all newly discovered gas fields should be reserved for Myanmar’s domestic needs. Still, frustration over the longstanding foreign-centric energy policy is intensifying.

To tame May’s protests against blackout protests in Yangon, the government hastily ordered generators and gas turbines from two US firms, Caterpillar and General Electric.

Just months before, the purchase would have been forbidden under sanctions. In Myanmar’s reform era, Western firms are suddenly presented with an opportunity to modernize Myanmar’s ailing energy grid with their reputations intact.

This is a sharp turnaround: paying the former junta to operate a pipeline off Myanmar’s coast has long stained the esteem of Total and, to a lesser extent, Chevron.

But Total, which has poured more than $20 million toward charitable projects in Myanmar, was vindicated when revered opposition figure Aung San Suu Kyi deemed the firm to be a “responsible investor” in May. Her rhetoric matches that of US Secretary of State Hillary Clinton, who has urged American operations to “invest in Burma and do it responsibly.”

Responsible or otherwise, multi-national energy firms with world-class expertise likely prove crucial in rehabilitating Myanmar’s energy grid. Under the junta, the nation saw its technical colleges deteriorate and its best and brightest flee abroad. As the government courts foreign investors, it is also urging far-flung engineers to return home for the rebuilding effort. “If foreigners want to come to Myanmar,” Kyaw Zaw Maung said, “then, please, tell them to bring all their technicians and experts.”

http://www.globalpost.com/dispatch/news/regions/asia-pacific/120622/myanmar-burma-electricity-power-struggle-black-outs