Report No. 5416-BA Burma:Issues and Options in the EnergySector Public Disclosure Authorized June 1985 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Reportof the JointUNDP/World Bank Energy Sector Assessment Program Thisdocument has a restricteddistribution. Its contents may not be disclosed without authorizationfrom the Government,the UNDPor the World Bank. ..- , < . .... n) vi :r U) 'I -) '-, "' r-1, C:) r.r., C) 7. < " W z -.,) a C Ly. ::D u ;7 fLI X CIJ CZ cr, cl", C-) C.) r,' M U " I L: n- cr all 71 cti t I i... fli 1%, tl IA V) ;t t C', L., WI' rl) 0 iD C'j Lrl C'j f' J M ) C% I C;) f -4 r) C) 'M -1 r" Ln -'N r-- 'I -. 1 .11 11, ("; -i tri C., r-i C, .-I C., .:t -4 0 tj, D r-- co.) r- t-, r-- -4 .- 4 L) r,,: t) --- 4 tn ,I r-. j f- in r- Cr, rN ., , 1, 4 - o:, 4 -:t C, t- r,j q, t, p- c7N Ln U"N C'k) r-- t-. I.D 01 r- r- Cl (n 4 10 ..I I - 4 if) t :r j F- C) rl, r -X) , 4 CW-t.,r '. f:, C.") 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Finance for this work has been provided, in part, by the UNDP Energy Account, and the work has been carried out by the World Bank. This report has a restricted distribution. Its contents may not be disclosed without the authorization from the Government, the UNDP or the World Bank. ABSTRACT Burma's energy resources are large and varied, including hydropower, oil, natural gas (onshore and offshore), coal, forest resources, and biomass residues. While the Government has done a commendable job of developing these resources largely on its own, their development has nevertheless been comparatively slow. WhiLe this may have constrained economic growth to date, it also provides a ready basis for an acceleration in future economic growth and increased exports. This report analyzes the technical, financial and institutional requirements for realizing that potential through the turn of the century in the context of two scenarios -- a Planned Growth scenario which reflects the official growth targets, and an Economic Growth scenario under which public finance and balance of payments constraints result in somewhat slower economic growth. Under either scenario a major investment program and infusion of current technology will be needed. The report recommends considerable technical assistance and studies to help effect this transfer of technology. Average annual investment requirements in energy development are estimated at up to $330 million annually over the next decade. To help finance these requirements, it will be necessary to improve the financial footing of the public corporations in the sector; this would entail price increases for many energy products. There is also a need to strengthen energy planning and inter-ministerialcoordination on energy matters. Although the requirements of this energy development program are large, in few countries would meeting them pay off as richly as in Burma. ACRONYMS ADB - Asian Development Bank BAC - Burma Airways Corporation BRC - Burma Railways Corporation CC - Construction Corporation CC - Ceramic Industries Corporation CIDA - Canadian International Developmeuit Agency CRO - Central Research Organization CSO - CenCral Statistical Organization ECC - Economic Coordinating Cowmittee EPC - Electric Power Corporation FAO - Food and Agriculture Organization FD - Forestry Department FIC - Food Industries Corporation FRI - Forest Research Institute FSSL - Five Star Shipping Line GIC - General Industries Corporation COB - Government of Burma HIC - Heavy Industries Corporation IDA - International Development Agency IWTC - Inland Water Transport Corporation MAF - Ministry of Agriculture and Forests MCI - Mining Corporation No. 1 MC2 - Mining Corporation No. 2 MC3 - Mining Corporation No. 3 MIl - Ministry of No. 1 Industry MI2 - Ministry of No. 2 Industry MIC - Metal Industries Corporation MOC - Myanma Oil Corporation MOTC - Ministry of Transport and Communications NORAD - Norwegian Agency for Development PIC - Petrochemical Industries Corporation PCIC - Paper and Chemical Industries Corporation PPSC - Petroleum Products Supply Corporation RTC - Road Transport Corporation SEE - State Economic Enterprise TC - Timber Corporation TIC - Textile Industries Corporation TSC - Technical Services Corporation UNDP - United Nations Development Programme CURRENCY EQUIVALENTS I Kyat = US$0.126 Kyat 7.88 = US$1.00 suMURENENTS Bbl Barrel of Oil = 0.15899 Cubic Meter; 42 US Gallons; 35 Imperial Gallons BTU British thermal unit = 0.252 kilocalories CF cubic foot = 0.02832 Cubic Meter Callon = 3.7853 Litres Glwb Gigawatt-hour = 1,000,000 kilowatt-hours (kWh) k;m Kilometer = 0.62 miles = 1000 meters kV Kilovolt (kV) 1},000 Volts kWh Kilowatt hour = 1,000 Watt Hours l1Jhr pound/hour m cubic meter = 6.289 barrels MCFD thousand cubic feet per day MMCF million cubic feet MVA megavolt ampere = 1,000 kilovolt ampere MW Megawatt = 1,000 Kilowatts (kW) MWh megawatt hour = 1,000 kilowatt hours TOE (toe.) ton of oil equivalent = 1,000 million BTU ton metric ton = 1,000 kilograms (kg); 2,204.6 Pounds Tpd tons per day Tpy tons per year BURMESE FISCAL YEAR April 1 - March 31 EVERCYCONVERSION FACTORS Fuel Million Kcal per Unit Physical Units per TOE Liquid Fuels (ton) Crude Oil 10.2 1.00 LPG 10.8 0.94 Kerosene 10.3 0.99 Jet Fuel 10.4 0.98 Gasoline 10.5 0.97 Gasoil 10.2 1.00 Industrial Diesel Oil 10.1 1.01 Fuel Oil 9.8 1.04 Natural Cas (mocf) 286 0.04 Electricity (MWh) 86 x 10 2 4.0 Coal (ton) 5.6 1.57 Fuelwood (ton) 3.5 2.91 Charcoal (tsn) 7.0 1.46 Fuelwood (m ) 2.5 4.10 Memo Items 1 TOE = 10.2 million kcal = 40.5 million BTU = 42.7 GJ 1 kcal = 3.968 BTU 6 1 kcal = 4.19 x 10 GJ 1 MHh = 860,000 kcal = 0.248 TOE at 34% efficiency in thermal (oil) generation This report is based on the findings of an energy assessment mission which visited Burma in June 1984. The mission comprised: B. Decaux (Chief of Mission), J. Borthwick (Economist), R.S.R. Chari (Coal Specialist), R. Chin (Refinery Specialist), A. El-Mekkawy (Petroleum Engineer), T. Fitzgerald (Geologist), D. Hughart (Energy Economist), D. Laurent (Fuelvood Specialist), and R.L. Luthra (Institutions and Transportation Specialist). The mission was joined by K. King (Energy Specialist) from the Asian Development Bank. TABLE OF CONTENTS Page SUMMARY AND CONCLUSIONS ..................................... i I. ENERGY AND THE ECONOMY ...................................... 1 Recent Macroeconomic Situation and Prospects .............. 1 The Energy Sector ......................................... 3 Commercial Energy Sources ............................... 4 General ................................................. 4 Petroleum Products . 5 Natural Gas.. ...........................................6 Electricity .. ...........................................7 Noncommercial and Other Energy Resources . 9 II. ENERGY RESOURCES ...... 12 Introduction ..... 12 Petroleum and Gas ........................ 12 Exploration Activities . ....................... 12 Oil and Gas Potential . ....................... 14 Hydroelectric Power ..... 17 Potential ..... 18 Future Studies ...... i8..... Coal ................ 9 Resources ..... 19 Production..... ................... 21 Development Prospects . ....................... 22 Fuelwood ..... 23 Resources ..... 23 The Deforestation Problem . ...................... 24 Nonconventional Energy . ..................... 25 Resources ..... 25 Forest and Wood Residues ...... 25 Agricultural Residues . ....................... 26 Solar and Wind Energy . ....................... 26 Recommendations ...... 27 III. DEMAND FORECAST SCENARIOS ......................... 2' Introduction ........................ 28 Commercial Energy ........................ 28 Electricity ........................ 31 Fuelwood and Biomass Residues......................... 34 Conclusions ........................ 35 IV. PETROLEUM ......................... 39 Crude Oil ........................ 39 Petroleum Refining ......................... 42 Distribution and Transport ........................ 48 Allocation Policy .......................... Recommendations ......................................... V. NATURAL GAS ............. .............* ................ 52 Gas Supply and Consumption . .... ......................... 52 Industrial Markets .................................. 54 Power Generation Market . ...................... ............... 56 Oil Refining .......................... .................... 58 Supply Forecast and Domestic Requirements ............... 58 Martaban Offshore Gas................. .......... ...... 60 Recommendations ............... ....... ............ ......... 62 VI. ELECTRIC POWER. ......... .e.................. 63 Power Supply System............ ....... ........