The Government of the Republic of the Union of Myanmar Ministry of Livestock, Fisheries and Rural Development Union Minister's Office Ref: 1 /200(N)/1+h' 040/ nA l2gzz lzAM) Date: I April, 2014

Ms. Patricia Bliss-Guest Head, CIF Administrative Unit CTF Trust Fund Committee 1818 H Street Ir{W Washington, DC 2A433, USA Subject: Expression of Interest for Scaling Up Renewable Program

Dear Ms. Bliss-Guest:

The government of Myanmar is pleased to submit this expression of interest (EOI) for SREP funding support.

Myanmar exhibits a paradox of extreme energy poverty in a land of abundant energy resources. (RE) resources are sufficient to meet most daily energy needs, but less than half of the total population has access to . Myanmar is the largest country in mainland Southeast Asia, but has one of the lowest population densities of the region, which imposes an inherent diseconomy of scale for conventional centralized electricity grid development and expansion. Electrification varies widely between urban and rural a.reas. Less than half the population has grid-supplied electricity, and the national grid covers only 1Vo of 65,000 villages. Considering the broad distribution of abundant RE, resources: , , solar, and wind. Myanmar has an opportunity to accelerate on- and off-grid electrification with RE, delivering universal electricity access much quicker than conventional centralized generation and grid expansion.

Myanmar is confronted with a number of barriers that restrain in general and RE development in particular. The govemment has recognized the need for a modern legal and regulatory framework to provide transparency and certainty which 2 are prerequisites for a viable commercial energy sector. Multi-lateral banks and other development partners are supporting the government's reform agenda. In March 2A14, the Myanmar Investor Forum on Renewable Energy Applications organized by Asian Development Bank (ADB) in collaboration with Ministry of Industry and the Ministry of Livestock, Fisheries, and Rural Development, highlighted energy access and development issues in the country. The forum provided a broad picture of how much investment is required from both the public and private sector for increasing energy access and finding financing mechanisms to lower barriers to investment.

Multilateral banks and other development partners are supporting energy sector with major investments, but to date there is limited support for RE and small-scale rural energy projects. Based on participation and feedback at a recent investor forum, there is signiticant private sector interest, with local firms gearing up and forming joint ventures. Ministry of Livestock, Fisheries, and Rural Development and regional governments have begun to float tenders for off grid systems, and private firms are responding appropriately.

SREP funding can provide timely support for: (i) strategic analysis for enabling policies, guidelines, and planning; (ii) targeted provision of concessional financing and credit enhancement instruments; and (iii) twinning and advice from regional peers that have scaled up RE programs. 'We look forward to favorable consideration of Myanmar's EOI. The Government is ready to prepare an Investment Plan with the support of the multilateral banks and other development partners, with a view to new SREP-supported project approvals and implementation beginning in 2015. Sincerely yours, *{-{a\,a For Union Minister Tin Ngwe Deputy Minister n of lnterest to Participate in SREP - Myanmar , I. COUruTNY RruO GOVENNMENT AGENCY SUAUITTIUC EXPRESSION OF INTEREST Country: Myanmar Agency: Ministry of Livestock, Fisheries, and Rural Development (MLFRD) Address; Office No 36, Nay PYi Taw, MYanmar Telephone/fax: +95(O)67-4 0827 1, +95(0)67- 409415, +95(0)67-409408 m ai I. com, i r. Email: i nfo. m |frd @g m ai I. com,kzaw. dda@q dtdltq @qmal!.qqm

II. DESCruPTION OF THE COUNTRY AND ENERGY SCCTON CONTEXT

Myanmar is geographically the largest country in mainland Southeast Asia with land .ou"6g" of O7O, SOg squaie kilometers; the estimated population is 52.80 million, with a populaiion Oensity of 8b people per square kilometer, one of the lowest in Southeast Asia. per capita gross domestic product (2012) is one of the lowest in the region at $857, compared io $1,015 in Cambodia, almost $1,400 in Lao PDR, and more than $5,500 in Thailand. IMF ranks Myanmar as one of the poorest countries, 162 out of 184: UNDp's Human Development lndex ranks Myanmar number 149 out of 187 . As of 2010, about afourth of the country's population lived in poverty''

Myanmar exhibits a paradox of extreme energy poverty in a land of abundant energy reiourcer. Renewable energy (RE) resources are sufficient to meet most daily energy needs, but less than half of tne total populationhas access to electricity. Per capita electricity consumption is 140 kilowatt-hours per year (kWh/y),one of the lowest in the region.M'ore thanTO% of the population is in rural areas, relying on biomass for cooking' Stightty over 4o/o of the population uses electricity for cociking.t About 7\ok of households depend on diesel lamps, batteries, or candles for lighting.tThe country's average a electrification grew from about 16% in 2006 to 28% in 2012. Electrification is concentrated in large cities: Yangon City has the highest electrification ratio (72%), folowed by Nay eyifaw (65%), (ayah (42%), and Mandalay (357").sOutside of urban areas, th; naiional power grid covers only 7% of 65,000 villages.According to preliminary estimates by the World Bank, achieving universal access to electricity would require investment of at least $400 million every year until 2030, well beyond existing public sector fiscal capabilities. Lack of access to reliable and in Myanma, is the most important energy sector challenge being faced by the government anO'it creates barriers to socio-economic development of the country. Considering the broad distribution of abundant RE resources, Myanmar has an opportunity to accelerate on- and off-grid electrification with RE, delivering universal electricity access much quicker than conventional centralized generation and grid expansion.

Energy Resources vs. lnstalled Generation Capacities Myarffar has substantial fossil resources and abundant renewable resources which remain largely untouched. As shown in Table '1, RE resources appear more than

Agency, , Ministry of National planning and Economic Development, Swedish lnternational Development Cooperation United Nations Children's Fund, United Nations Development Programme.2011. lntegrated Household Livrng Manila Conditions Survey in Myanmar (2009-2010); and ADB. 2012. Asian Development Outlook 2012: Update. '1-2 2 UNDp Future Rurit Renewable Energy activities by UNDP (2013-2015), November 2012, Nay Pyi Taw .Ut\Op Nations Development Programme, Myanmar (ZOt f ) Accelerating Energy Ac-ess for All in Myanmar. United .- ii i" Oltinei as the numSer of e]ectrified households connected to the grid over the total number of households , ih. *th lowest electrification ratios are Yakhine (6%), Tannintharyi (9%), and Ayeyarwaddy (10%). "i".i

, 2 Myanmar: SREP Expression of lnterest sufficient to meet 1OO% of electricity demand.6 The total installed generation capacity is dominated by hydropower and gas;actual generationin 2010-11 was estimated at 1,340 MW versus demand of 1,850 MW.?Off-grid electricitysupply is dominated by a network of 175 diesel generators supplying energy to 121 villages. Aside from hydropower, RE provides negligible electricity supply, with only 1'16 kW of , 519 kW of wind energy, 4 MW of biomass, and 1.6 MW of biogas capacity installed and operating in 2009.

Table 1: Energy Potential and lnstalled Generation Capacity,2O10-2011 On-Grid Off.grid Total Resource Potential (MW) {MW) (MW) Rice husk (a.3 MVy) Lumber waste ('1 5 MVy) Bagasse (2.1Mlly) Biomass u 0 4 4 Molasses (A.2a MUy) Livestock waste (34 Mt/y) Jatropha (700 Mgal/y) Geothermal 93 prospective sites 0 0 0 200 potential sites Hydro 2,526 33 2.559 38 GW, 152 TWh/y 4.5- 5.5 kWh/m'ld Solar b I 0.'1 16 0 116 51 TWh/y technical potential Wasteto-enerqy 20 MW technical potential 0 0 0 Wind 365 TWh/y technical potential 0.519 0 0 519 nla 120 0 120 Diesel nla 0 63 bJ Gas 334 Billion m" proven reserves 715 0 715 TOTAI. 3,361 {00 3,458 61ry=gigawatt, /d=kilowatt-hours per meter squared per day,day m =cubic meters, Mgal/y=p'1 gallons per year, MVy=rn;11;on tons per year, TWh/y=terawatt-hours per year Note: n/aCoal and diesel fuel supplies are limited by local production and import / intermodal trans-shipment capacities uMyanmar Sources: Engineering Society, 2A12 as cited in UNDP (2013) oUNEP (2013) Emission Profile in Myanmar; wind potential requires site-specific surveys for quantification

III. RATIONALE FOR SELECTED SECTORS FOR SREP FITTNNCII.IC

A number of barriers constrain energy development in general and RE development in particular. The government has recognized the need for a modern legal and regulatory framework to provide transparency and certainty which are prerequisites for a viable commercial energy sector. The government has also designated the Ministry of Livestock, Fisheries, and Rural Development (MLFRD) as the focal point for rural infrastructure including rural energy, and by implication RE development for rural energy access. Multi-lateral banks and other development partners are supporting the government's reform agenda. Table 2 summarizes key issues and how SREP-supported investments might address many of the barriers.

6Assuming an average electricity consumption target of 1000 kWh/person/year - which is about 10 times the current average per capita consumption - about 60 terawatt-hours per year (60 TWh/y) would meet 100% of demand including allowance for transmission and distribution system losses. tUrufR IZO1S; Emission Reduction Profile Myanmar. The difference in nominal installed capacity versus actual outpul indicates that many existing power plants are in need or rehabilitation and upgrade

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Table 2: Barriers to RE Deployment Bariiers , Mitigating lnteiventio'ns POLICY AND REGULATORY . Update of Electricity Law to - . Lack of comprehensive planning processes for guiding implement commercial operations energy sector development. across the chain, lnadequate legal and regulatory framework for RE r facilitate private sector investments. participation, and support adoption industry and r Tariffs are cross-subsidized between of international best practices are too low to attract residents; tariffs r Technical assistance to commercial/foreign investment. strengthen regulatory f ramework prioritieswith emphasis on upgrading . Conflicting and RE policies for on- and off- grid hydro and fossil national and building centralized grid energy services power plants instead of off-grid energy access. INSTITUTIONAL CAPACITY, INFORMATION, AND AWARENESS Comprehensive energy resource . lnsufficient functioning of power sector governance mapping and creation of an and weak organizational capacity to establish policy integrated monitoring and and strategy formulation, including off-grid / mini-grid evaluation system to ensure programs. relevant data are collected, . Ministry of Livestock, Fisheries, and Rural monitored and processed for Development (MLFRD) has been recently appointed effective panning and project as the focal point for rural infrastructure including rural identification and implementation. energy, but the institutional framework is not yet fully Capacity development integral operational. with implementation of prototype . Solar resource mapping has been conducted; similar and demonstration projects will surveys are required for other RE resources. ensure sustainable operations of . Limited promotion and dissemination on the use of RE systems ("learning by doing"). renewable enerqv technologies . Comprehensive assessment of rural energy resources and needs TECHNICAL undertaken with a focus on energy low quality solar home systems and . Prevalence of demand for households, small and in marketplace lead to poor user solar lamps the medium enterprises, and low levels of trust and adoption, experiences and community and public services. and lack of transport r Geographic challenges . lntroduction of Quality testing delivering energy services connectivity drive up cost of methodologies poor rural areas. in . Support to private sector to develop distribution networks Support private sector investments for on and off-grid RE solutions FINANCIAL AND PRIVATE SECTOR PARTICIPATION Targeted subsidies for new . High up-front capital requirements for renewable consumer connections energy systemss Perceived risks such as high . High cost for new consumer connections to the grid capital costs, first-mover risks, and (currently $595 per customer) additional costs due to intermittent Underdeveloped financial sector, including limited rural ' nature of resources will be banking networks, limits access to capital and reduced creating more financing financing. and credit facility available among local banks.

8A field rapid appraisal survey confirms that main obstacle among households not yet using solar energy is the high upfront cost of the system. ln addition, the market penetration of SHS is currently limited to villages located near larger townships and/or districts. (ADB Scoping Mission ADB (2014): Scoping Off-Grid Renewable Energy Opportunities in Myanmar: Mandalay Region and Chin,State).

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Potential Conceptsfor SREP Financing ln addition to the key SREP criteria (RE capacity, RE output, access to energy and productive end use of energy) additional factors for program and project selection will include: r Resource potential r Affordability and competitiveness . Diesel consumption displacement . Economic, social, and environmental benefits . Deployment exPerience . GHG emission reduction potential o Attractiveness for commercial / private investment . Sustainable private sector business models . Economic and financial viability

A detailed assessment of options will be conducted during SREP lnvestment Plan (lP) preparation in order to elaborate on prospective investment modes and business models.The relative lack of experience in RE project development can be compensated for through a learning-by-doing approach which wraps capacity building around project identificaiion, development, and implementation. A preliminary review of resource potential, variety of applications, scalability, and potential for private investment, suggests that hydropower, solar PV, wind, and biomassare particularly attractive. lnCreasing access to reliable and sustainable energy to the entire population of Myanmar using the most suitable RE systemswill be the overarching theme of the SREP lP.

Hydropower,Hydropower is attractive for several reasons: it is the largest clean energy reiource with i potential of over 10O,OOO MW; it can"provide base-load and peaking power, complementing variable-output RE such as solar and wind; it is scalable from village-level micro-grid applications to MW and GW scale grid-connected plants; and it currently accounts for 74% of grid connected capacity and is thus familiar to government, utilities, and consumersto. More than 200 sites have been identified with 38 GW potential, of which 36 projects with aggregate capacity of 36 GW have been identified for development; small hydro potential (< 10 MW per project) is estimated at 10 - 15 TWh/y. SREP funds would target grid-connected small hydropower and village- scale micro-grids. Private investment could support grid-connected projects, and possibly som e vi llage-sca le m icro-g rid projects.

Solar PV.Solar energy has a variety of applications including: cooking; industrial and residential water heating; water purification; water pumping, battery charging, and lighting; solar air drying-for agricultural and industrial products.llUpfront capital costs remain a barrier for poor consumers. SREP could support deployment of solutions via "pay as you go" and other innovative business models implemented by commercial energy service providers. SREP could also support models where telecom companies use renewable energy to offset potential diesel consumption in the rurall off- grid areas. Utility-scale solar farms in the central dry zone should be considered as a eworld Bank (1g92): Energy Sector lnvestment and Policy Review Study 1992, lndustry and Energy Division Country Department ll Asia Region. Mandalay Region and Chin State 'oAOti (201+): Scopinq Off-CriO Renewable Energy Opportunities in Myanmar: 11 A solar asiessment-conducted by Silpakorn University concluded existence of relatively high solar energy potential with yearly average of solar of 18.3 MJ/m2-day. High solar radiation is observed from February to l\,4ay for mosl parts'of the iountry. Central plain including Mandalay Division, Sagaing Division and Magway Division receive high solar radiation (18-22 MJlm2-day) for almost the whole year.

Final Version 5 Myanmar: SREP Expres sion of lnterest more practical alternative to large hydro- and fossil power projects which have extremely long gestation periods.s

Wind Energy. Wind energy has high technical potential, mainly in coastal and mountainous areas, but the economic viability will depend on wholesale (off{ake) tariffs. ADB is considering mobilizing funds for a wind survey focusing on the wind-rich south, which would facilitate competitive IPP project development. The government has signed a memorandum of understanding with a private company from Thailand to develop 1,000 MW of . SREP funds could be used to structure a private sector program for wind development to increase domestic participation and competition, and could also support micro-grid installations including solar-wind hybrids and other wind- hybrid systems.

Biomass.Biomass is readily available in rural areas which are in most need of commercial energy services. Rice husk gasifiers have a rich heritage, providing valuable experience for expanded biomass energy development. SREP could support a varietyof projects which have capital cost and first-mover barriers including improved cook stoves, household and village-scale biogas, and possibly agro-industrial co-generation.

IV. ENaBLITIC POLICY AND REGULATORY EI'IVIROI.IUCruT

Energy related laws and policies are summarized in Table 3. The national energy sector policies include: implementation of short term and long term comprehensive energy development planning; promotion of international cooperation on energy development, private sector participation, and privatization of state energy organizations; compilation of systematic statistics on energy resources, supply," and demand; expanding local access to domestic energy resources; promote , efficiency, and development of renewable energy resources; establishment of Research, Development, Design, and Dissemination lnstitution to support domestic manufacturing and services; and formulation of rational energy pricing. The power sector in Myanmar is currently governed by the Electricity Supply Act 1948 (as amended in 1967), the Myanmar Electricity Law (1984) and the Electricity Rules (1985).An update of the Electricity Law is in progress; the revised law will reflect current international best practice in governance and private participation in the sector, and will address the following challenges:

. Development of a Grid Code Defining appropriate guidelines and requirements based on current international best practice to allow lndependent Power Producer (lPP) to connect to the Myanmar national grid. . Creating and implementing a sound pricing policy for energy and tariffs informed by appropriate modeling and financial analysis of the sector. The current tariffs for gas and electricity in the domestic market are not fully cost-reflective. Retail tariffs are highly subsidized, which increases development risks, delays urgently needed investments, andcan drive up the cost of IPP proposals.l2

The National Electrification Plan (NEP) for Myanmar, being prepared with funding support from Sustainable Energy for All (SE4ALL) and implemented by lDA, is developing a national electrification program and will establish an analytics base for electrification planning in the country, in addition building the necessary institutional

12 World Bank (2013): Myanmar: An Outline of Energy Development Policy

Final Version 6 Myanmar: SREP Expres sion of Interes, capacity. The recently adopted National is an important policy base for promoting investments in the country's energy sector and it provides strong support for investments in RE in Myanmar.

Private sector participation through partnerships with the government has facilitated investment in off-shore gas production and gas pipelines. Broader private sector participation in the electricity sub-sector is only recently being considered,l3and to date has been limited toindependent power production (lPP) projects for local investors and build-operate-transfer (BOT) or joint ventures (JV) for foreign investors. No formal bidding system exists except in the oil and gas sector. For on-grid projects, interested foreign investors are asked to submit proposals bilaterally to the government and then enter into a memorandum of understanding with the government directly, after which project feasibility is evaluated and project implementation agreements agreed upon. lt is important to encourage interested qualified private sector lPPs to bid for RE projects, such as small hydropower projects, not only to ensure private sector participation but also to support capacity building and skill development in the energy sector.

Table 3: Key Energy-related Laws and Policies ;Name:lYear Desbription Electricity Act / 1948 Declares the statutory powers and functions of the state's electricity boards (Amended 1967) and generating companies with the goal of providing the rational use of the production and supply of electricity. Myanmar Electricity Law / Maximize the rational generation, production, transmission, distribution, '1984 and usaqe of electricitY. Private lndustrial Avoid environmental pollution in the face of rural development and Enterprise Law / 1990 industrialization, and to promote the use of energy in the most economical matter. Forestry Law I 1992 Prevent dangers of destruction to forests and biodiversity and to conserve and establish forest plantations (partially for fuelwood supply). National Environmental EstaOtisfr sound environmental policies in the utilization of water, land' Policy / '1994 forests, mineral resources, and other natural resources to preserve the natural environment and prevent its degradation. Conservation of Water Conserve and protect the water resources and rivers for beneficial Resources and Rivers utilization by the public, and to prevent serious environmental Law / 2006 contamination. National Sustainable Promote social, economic, and environmental growth and achieve Development Strategies / sustainable development. 2009 National Energy Policy / Adopted recently, this provides a policy basis for promoting investments in 2014 the country's energy sector; emphasizes the importance and provides stronq support for investments in renewable energy Foreign lnvestment Law / Promote a more liberalized economy through foreign direct investment and 2012 private sector development; provides protection to foreign investors through bilateral investment treaties. Environment Conservation Updates legal basis for enhanced environmental management measures Law I 2012 Linked to environmental and social safeguard requirements of Foreign lnvestment law

Various sector development reformshave been undertaken or are being considered to increase private sector participation in the country.The Government tasked the Directorate of lnvestment and Company Administration (DICA) to serve as coordinator of

13 World Bank (2013): Myanmar: An Outline of Energy Development Policy

Final Version 7 Myanmar: SREP Expression of lnterest investment attraction, new investment promotion department and a one-stop shop. Together with Ministry of National Planning and Economic Development, the two government agencies are responsible for scrutinizing and appraising proposed investment projects, monitoring and reporting the implementation of permitted enterprises, registration and administration of Limited Companies, Joint Ventures, Partnerships and Association and Association and taking part in regional cooperation relating to investment matters.The creation ofSME Development Centre (launched in April 2012)as a central committee for SME development will ensure the availability of financial capital from the government and private banks. lt will establish network with local and foreign organizations to meet technical requirements, encourage market devetopment of SME from rural to urban areas, make SME supporting industries for local and foreign investment to promote healthy development of market chains. A new upcoming SME law will also be available.

The enactment of the 2012 Foreign lnvestment Lawis a milestone towards creating a more open and secure legal environment. The law promotes a more liberalized economy through foreign direct investment and private sector development; it provides strong protection to foreign investors through bilateral investment treaties. The new foreign exchange management law will create a financial sector roadmap that will foster monetary development; the law will open the banking sector to foreign participation and develop the country's capital market. Reforms on regulatory capacity include the Framework for Economic and Social Reforms 2012, which will cover significant regulatory reforms for energy, transport, and communications sectors.

V. ltrtslturtoruAL AND TEcHNIcAL CRpacttv

Eight ministries are responsible for energy development:

1. Ministry of Energy (MOE) is the focal point for overall energy policy and coordination. 2. Ministry of Electric Power (MoEP) supports general rural electrification programs in the country. The electric utility sector is divided into the Gas and Hydro Power sector and the Power Distribution sector. 3. Ministry of Mines (MOM) is responsible for the coal sector. lt formulates mining policy, grant exploration permits, and coordinate the mining sector. Exploration ., permits are issued to private companies in accordance with the Myanmar Mines Law, 1gg4. The Department of Geological Survey and Mineral Exploration is responsible for mapping, prospecting, and exploration of minerals, including coal. 4. Ministry of Agriculture and lrrigation (MOAI) promotes renewable energy and is responsible for and micro-hydro for irrigation purposes. 5. Ministry of Science and Technology (MOST) promotes renewable energy and responsible for related research and development, and ensuring that the deployment of renewable energy technologies addresses the basic energy requirements of rural households and the agriculture sector. 6. Ministry of Environmental Conservation and Forestry (MOECAF) is assigned to manage fuelwood and other biomass related energy needs; it is responsible for climate change and environmental safeguard requirements; 7. Ministry of lndustry (MOl) is responsible for energy efficiency; and 8. Ministry of Livestock, Fisheries, and Rural Development (MLFRD) is the focal point for rural energy access.

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The National Energy Management Committee and the Energy Development Committee, established in January 2013, aim to strengthen coordination among the seven ministries with a view to improving resource planning for and oversight of investment in energy sector development.The Committee is tasked to:

. Coordinate public-private partnerships in the energy sector and devise ways to modernize energy infrastructure; . Systematically link goals of the Energy Plan and lndustrial Development Plan; . Formulate laws to regulate energy projects and minimize environmental and social impacts; . Set prices for the purchase and sale of energy products; . Educate staff from the private sector and media about energy technology; and . Gather information to enable the effective use of energy and the efficient coordination of energy Projects.

The Government is currently developing a national framework to guide donor activity and manage the rapid inflow of donor assistance.ln 2Q12, two coordination bodieswere established to manage donoractivities:

r Foreign Aid and Grant Management Working Committee:manage or effective allocation and utilization of foreign aid, grants and loans in addition tothe state budget, and foreign and direct investment, through the national development plan and the reform strategy for the socio-economic development; priority sector [plans] and priority area [plans]will be submitted to the Central Committee after coordinating with the National Development Plan and Reform Strategy and with the National Economic and SocialAdvisory Council. . National Economic and SocialAdvisory Council (NESAC): advise on the formulation of the National Development Plan and Reform Strategy,promotion of domestic and foreign investment, and foreign aid and grants.

A number of non-governmental organizations are also active in promoting energy access in the country. The Renewable Energy Association of Myanmar (REAM) aims to increase the living standards of rural people and to protect the environment through the promotion of RE applications. The Myanmar Engineering Society (MES) promotes technical assistance related to renewable energy activities across the country.

ln March 2014, the Myanmar lnvestor Forum on Renewable Energy Applications (organized by ADB in collaboration with MOI and MLFRD)highlighted energy access issues in the country. The forum provided a broad picture of the level of investment required from both the public and private sector to increase energy access in the Mandalay Region and Chin State as well as find financing mechanisms to lower the barriers to investment.The forum points to converging factors that support RE development: (i) the need to accelerate energy development for on- and off-grid applications aligns well with a variety of abundant RE resources, (ii) a rapidly evolving and increasingly supportive policy and regulatory framework that will facilitate private investment in energy development (as described in Section lV), and (iii) targeted support from development partners for development of RE-based rural energy services. MLFRD will collaborate with its development partners in the initial years while also working on further developing its existing technical and implementation capacity by investing in people, systems and processes.

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Potential lmplementation Risks

Table 4: Potential lmplementation Risks Risks DeScription/Mitiqation . Updated electricity lawwill serve as the foundation for the regulatory framework. Legal and regulatory risks: weak o Technical assistance will support creation of the enabling institutional and legal framework to environment for commercial investment in RE, including: (i) support RE developmentand comprehensive and transparent regulatory framework, (ii) deployment. modern law and regulations governing private sector investment, and (iv) experience in and capability to facilitate long{erm foreign investment in infrastructure. lnstitutional Risks: the energy . There is a need to strengthen coordination among the agencies sector is fragmented, and there is a to ensure that the country's anticipated plans and vision for its lack of relevant knowledge and energy sector can be translated into actionable plans with expertise of RE. secured financing. a Tariffs to be rationalized pursuant to updated Electricity Law. Financial Risk: tariffs are set below a Standardized power purchase arrangements will provide more economic cost of supply. certainty and transparency to developers and financiers. Renewable resource uncertainty: r Technical assistance for RE resource mapping, energy demand information on renewable energy mapping and projections, and optimization of RE development resources is limited. RE technology based on consumer needs and applications. A learning-by- outputs may be lower than doing approach will be implemented with capacity building expected due to seasonal variation. "wrapped around" project development and implementation lnvestmentclimateand fiscal . The government will establlsha national energy agenda and constraints: changes in political legal framework to promote and create a business-conducive and administrative structure may and investor-friendly ene6,9y sector. create uncertainty; the country is o Fiscal reforms to be implemented to ensure adequate perceived as high-risk investment government budgets for electricity and energy development. destination. Social and environmental risks:legal requirements require r ADB is supporting development of country safeguard system further definition and clarity; limited consistent with multilateral bank and other donor requirements institutional capacity for managing (RETA 7566: Capacity Building for lmplementing Environment safeguards issues in infrastructure and Social Safeguards in Myanmar) proiects vt. PRoGRAMS OF MDBS AND DEVELOPMENT PARTNERS

Relevant ongoing programs supported by the developmental paftners are listed in Table 5. These on-going programs will provide the platform for SREP interventions to be further identified during lnvestment Plan preparation.Muitilateral banks and other development partners are supporting energy sector with major investments, but to date there is limited support for RE and small-scale rural energy projects. Based on participation and feedback at a recent investor forum, there is significant private sector interest, with local firms gearing up and forming joint ventures.MLFRD and reglonal governments have begun to float tenders for off grid systems, and private firrns are responding appropriately. SREP funding can provide timely support (i) strategic analysis for enabling policies, guidelines, and planning; {ii) targeted provision of concessional financing and credit enhancement instrumenis; (iii) twinning and advice from regianal peers that have scaled up RE programs; and (iv) supporting private sector scalable and sustainable business models.

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Table 5: Energy Related Development Programs Title / Budget Donor I Project Project description (US$)/ Pioject completion date ADB 13084-MYA: Power Rehabilitation of distribution network in five townships in Yangon

Distribution I mprovement Project region, four districts in Mandalay region, five districts in Sagaing $60 million 12014-2016 reqion, and two townships in Magway region. ADB CDTA 8356-MYA: Part 1: Preparation of a2Q-year energy master plan for Myanmar, lnstitutional Strengthening of including an energy demand forecast, supply options, investment National Energy Management requirements, and legal and institutional arrangements.Part 2. (i) Committee in Energy Policy and Establishment of coordination mechanism and institutional Planning arrangements between relevant ministries (ii) lmprovement of policy $1.35 million/ Aug 20'13-Oct 2014 framework for the government's energy policy and strategy, energy efficiency policy, and renewable energy development strategy ADB PATA 8469-MYA: Updating of the Myanmar Electricity Law (1984) and Electricity Rules Enhancing the Power Sector's (1985) so that they reflect current international standards and create Legal and Regulatory Framework an enabling framework for introducing an electricity regulator and $0.86 million iOct 2013-Dec2O14 corresponding institutional arrangements The TA will also evaluate the need and prospects for regulation of rural electrification. ADB S-CDTA 82,I6-MYA: Financial management assessment of four power sector agencies Financial Management udder MOEP namely YESB, ESE, MEPE, and HPGE. Assessment of Energy Sector $0.16 million/ Nov 2012-APr 2014 ADB TA Off-Grid Renewable Objectives: (i) support the installation of renewable energy-based Energy Demonstration Project systems for providing energy access (mostly solar PV and biomass- $2. 0 million/Ju n 201 4-Jun2O17 based systems) to schools and other public infrastructure in at least 25 villages, (ii) develop geospatial least cost energy access plans and an investment plan for select states and regions in the country, and (iii) strengthen the capacity of the government institutions to design and implement small-scale renewabl6 energy systems in off-grid areas. JICA Regional Development Objective is to assist poverty alleviation through urgent rehabilitation of Project for Povefty Reduction basic infrastructure such as roads and bridges, electricity, and water socio- Phase I supply in 7 Regions and 7 States, thereby contributing to economic development of MYanmar. World Bank P143988: Electric Two components: (i) supply and installation of a Combined Cycle Gas Power Project Turbine power plant at the existing Thaton Gas Turbine station, (ii) $140 million/ 2013-2018 institutional and capacity building suppcrt to MOEP and MFPE SE4ALLAI/orld Bank P1 43988 The main objective of this TA is to help develop a national National Electrification Plan electrification program,and associated investment prospectus for the Technical Assistance $1.5 first five years of its implementation. Key components include: (1) millionl20l4 understanding the energy sector and the topic of electricity access in Myanmar, (2)establishing an analytic basis for electrification planning (3) developing a national electrification program, (4) building institutional capacitv for national electrification UNDP Environment, Climate Target outputs: (1) capacities to adapt to climate change and reduce Change, Energy and DRR disaster risk. (2) capacitles to sustainably manage natural resources Programme (3) access to energy in rural areas (including increasing access to 2013-2015 rural, off-qrid electriclty supply). IFC / Myingyang IPP / Project IFC is advising the government on competitive selection process for Cost US$250M / September the 250 MW combined cycle gas fired MyingyanlPP project to supporl 2015 (estimated) public-private partnerships in the power sector, which will allow the government to leverage private capital. This complements IFC's engagement on power distribution by helping to create a PPP framework that would allow quality power developers to invest in Mvanmar.

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