ASEAN Beat | Economy | Southeast Asia

Blackouts and Fuel Price Surges Bite in Post-Coup Myanmar

Fourteen months on from the military takeover, many ordinary people are struggling to pay for basic necessities.

Blackouts and Fuel Price Surges Bite in Post-Coup Myanmar

A road-side petrol stand in a village close to Inle Lake, Myanmar.

Credit: Flickr/Alejandro

On March 6, a notice issued by Myanmar’s Ministry of Electricity and Energy (MOEE), under the control of the military junta, spread widely on Facebook and Viber. The notice stated that 24-hour-long blackouts were to occur across the country during the week of March 12-18 as underwater gas pipelines were being rerouted.

The note sent tempers flaring on social media. Netizens became irate when some news platforms claimed the blackouts would last the entire week. Outside of the capital Naypyidaw and a few privileged neighborhoods in Yangon and Mandalay, all of Myanmar has been experiencing crippling blackouts. Many Burmese have had to wake up at 2 or 3 a.m. to pump water when municipal pumps are operational, sometimes cranking hand pumps for hours.

Blackouts are nothing new in Myanmar. Until a few years back, back-up generators were ubiquitous and considered an essential household item. Candle-lit protests against blackouts erupted in 2012 and scheduled outages were implemented in 2019. And the situation has worsened since the coup. During last July’s deadly third COVID-19 wave, power cuts also brought about many avoidable deaths. People went on social media to accuse the State Administration Council (SAC), as the junta refers to itself, of withholding electricity as collective punishment against its opponents.

According to MOEE’s data for March 16, the country is currently generating electricity at less than half its normal capacity. During summer, hydroelectric power plants accounting for 54 percent of Myanmar’s installed capacity regularly see steep drops in generation. Currently, they are only producing at one-fifth capacity. The SAC has been exploring solar power to address the perennial electricity issue but a tender last November for projects attracted little interest.

MOEE’s notice stated that the country’s electricity supply was also affected because power lines from the important Lawpita hydroelectric plant in Karenni State had been blown-up by People’s Defense Forces (PDFs) opposing military rule. It further said two major liquefied natural gas power plants in Yangon were not functioning  because of high fuel prices. And on March 18, the junta introduced alternating four-hourly electricity rations to Yangon and other cities during the daytime. Its spokesperson later said the rationing will be in place until May.

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Fiscal woes have added a new dimension to the problem. The Civil Disobedience Movement (CDM), which followed the military coup of February 2021, saw many citizens refuse to pay electricity bills. This boycott is estimated to have cost the SAC $1.5 billion in lost revenues over the course of last year. PDF attacks have targeted utility offices and bill collectors to scare away bill payers and to further strain the SAC’s stretched resources.

The military junta is slowly collecting utility bills in major cities by replacing striking staff, adopting digital payments, disconnecting non-paying homes, and using intimidation against those refusing to pay. However, budget constraints, a weak currency, PDF attacks, aging infrastructure, and poor maintenance will continue to impact the situation. Citizens feel cheated as they have experienced power cuts despite begrudgingly paying their utility bills and this will fuel more resentment against the SAC.

MOEE’s notice in early March came as the price of octane fuel has risen by nearly 50 percent since January 1. Diesel, used for backup generators, irrigation pumps, and vehicles, is 60 percent more expensive than at the start of the year. Overall, fuel prices in Yangon have more than tripled since the coup. The impact is worse in remote and conflict-affected areas such as Kachin and Chin states, where prices were high even before the coup.

Myanmar produces abundant natural gas, which is used by public buses and taxis offering a buffer against international oil shocks. However, compressed natural gas (CNG) filling stations have also been hit by blackouts, and some bus services have had to reduce the frequency of their services. Community welfare and emergency ambulance groups also reduced services due to high fuel prices.

The fuel price spikes are biting deeply into the wallets of ordinary people. Essential commodities like rice and edible oil are absorbing the spillover. Since late February, the cost of rice has risen by 20 percent, and imported palm oil has doubled in price. Food manufacturers and shops have also faced huge challenges, as they cannot operate equipment or store produce properly. Farmers are also facing difficulties irrigating their summer rice paddies due to surging diesel prices.

Fuel stations, tankers, installations, and their staff have also been targeted by PDF attacks. The attacks are based on allegations that these assets are owned by pro-military businesses. Others are accused of importing jet fuel for combat aircraft. Another reason is to deny the SAC tax revenue from fuel sales and cripple the SAC’s military and economic activities. Denko, a major petrol station chain whose owner is accused of being a junta crony, has been hit especially hard.

The power cuts and fuel prices are also hammering Myanmar’s already battered manufacturing sector. The sector had been gradually recovering since mid-2021, but material shortages, border closures, and blackouts have sapped output. Many factories in major cities have halted operations or reduced operation hours due to the double whammy of economic recession and rising energy costs.

Then, on March 17, Yangon’s industrial zones were informed that they would receive electricity from 9 a.m. until 5 p.m. only. Export factories are spending huge sums on diesel for their backup generators to meet production deadlines. These developments will further endanger businesses on the brink of collapse due to the fallout of the COVID-19 pandemic and the coup.

Since the coup, the Central Bank of Myanmar (CBM) has sold $553.8 million in U.S. dollars in order to stabilize the kyat currency. It has prioritized auctions to fuel and edible oil merchants to cushion the impact of domestic turmoil and international trends. However, the CBM is fighting a losing battle further intensified by crippling blackouts. Business sources familiar with and close to the auctions and import sectors have told the authors that currency speculation and hoarding have been major factors in exchange rate instability, since before the coup. And now, their impacts are worse due to the overall political and economic situation.

What’s more, Myanmar is only now entering summer. Blackouts will only get worse as hydroelectric power plants further reduce output until the monsoon season starts in June. Global fuel shocks and currency fluctuations will continue to keep domestic fuel prices volatile. These two factors will make life very difficult for ordinary Burmese already struggling because of economic decline, rising food prices, and spreading conflict. As homes and factories go dark through the night, resentment against the SAC will be stoked even brighter.