This document discusses power sector regulatory reforms in Myanmar. It explains that reforms are aimed at protecting consumers, encouraging investment, and ensuring reliable power supply. It outlines the establishment of the Electricity Regulatory Commission to regulate the sector but notes more clarification is still needed around its powers and processes. The document also discusses licensing procedures, tariff determination, supporting regulations needed, the ability of foreign investors to participate in the sector and other legal issues relevant for power projects in Myanmar.

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8 Things You Should Know About
Power Regulatory Reform in Myanmar
Oliver Massmann – Partner
DUANE MORRIS SELVAM

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Infrastructure &
Major Projects
ASEAN and South Asia

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What are power regulatory reforms for?
– To protect against monopolistic abuses by natural
monopolies
– To provide power supply assurance
– To ensure coordination of power sector operations
– To increase financing available for investment
– To improve quality of power services
– To introduce and reinforce competitive
market structures

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How does power sector regulatory reform
work?

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How does power sector regulatory reform
work?

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Myanmar Power
Sector Regulatory
Reform: Early
Steps

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 Meet national power needs
 Enable safe and broader use of electric power
 Establish and impose standards on electricity-related businesses
 Protect consumers
 Encourage local and foreign investment
 Ensure adherence to Myanmar’s international environmental
protection obligations

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ERC: A step in the right direction, but…

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3. How does licensing work?
 Permitting authority divided between :
‒ MOEP and “Other Relevant Ministry”
‒ Relevant Regional or State governments
‒ Leading bodies of relevant self-administrated regions and zones
 Applications evaluated on the basis of transparency, fairness,
competitiveness and sustainability.
 Duration provided by Permitting authority.
 At the end of Permit term, the permitted person is to transfer
business in its original form or in accordance with conditions agreed
to at time of Permit issuance.

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4. How does tariff determination work?
 MOEP may prescribe an appropriate rate for “consumers”
depending upon the region.
 The rates may be adjusted from time to time.
 Decentralized level may, through coordination
with MOEP, prescribe rates under their own
arrangements.

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Tariff: The grey areas….
 MOEP’s authority to regulate tariffs appears to be limited to
retail tariffs.
 Only standard specified to govern tariff determinations is that
electricity rates should be ―reflective of modern times‖.
 Electricity Law does not yet provide any processes or
procedures for:
‒ processing tariff applications; or
‒ determining tariffs.

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– Issues around allocation of regulatory responsibilities and
functions
 Further emphasis needed on competition and power
sector structural reforms
– Desired market structure.
– Requirements on competitive power solicitations.
– Revisions of service obligations.
– Greater clarity around encouraging foreign
investments in the power sector

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5. What’s next? Supporting regulations…

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6. What about foreign investors?
 In general, foreign energy companies are allowed to act as
Independent Power Producers (IPP) in Myanmar
 Few restrictions under FIL Rules:
‒ Electricity generation under 10 megawatts – usually
restricted to local investors
‒ Foreign investors in <10 megawatt projects—
only up to 80 % equity

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6. What about foreign investors?
 Administration of foreign investors in the power sector:
‒ All power deals by foreign investors have to be through the
relevant government entity under Ministry of Electric Power
(MOEP).
‒ Normally, Myanmar Electric Power Enterprise
(MEPE) submits the MIC proposal as a promoter.
‒ Myanmar Investment Commission (MIC).

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6. What about foreign investors?
• Notification 49/2014:
 Reduced list of activities prohibited to Foreign Investors (now
only 11): administration of electric power systems, inspection
work related to electric power
 Small scale and medium scale electric power generation work
must be done in joint venture with Myanmar nationals
– Formerly, hydro and coal power plants were listed as having
to be in a JV BOT with a government entity –
does not seem to be the case anymore

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7. What are the other power development
issues to be aware of?
 Access to land – example of
telecoms towers
 Community consent
 Project financing
 Challenges in rural areas
 Environmental requirements

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Some other major legal issues
• Offshore Arbitration
 Neutral venue to solve commercial disputes
• New York Convention of 1958

• Choice of Foreign Law
 Contract Act of 1872 allows the choice of a foreign law.
• PPA Template
 One well-drafted PPA template, and
 Roll out same form for each project.
 Translates into minimal changes and consistent positions.
• AGO’s Legal Opinion
 Opinions provide sponsor and lenders confirmation on relevant laws so assumptions/plans
are confirmed/clear.
 Alleviates legal risks.

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8. Power sector legal reform : only one
part of the process New Competition Law (2015)
 Draft new combined Investment Law (merged FIL and MCIA) – IFC-funded
project, consultation process begun
 Draft new Companies Act – ADB-funded project, draft under public consultation
 Dispute resolution – NYC accession, not fully implemented yet
 Employment – new minimum wage and other changes to labor law coming
through
 Foreign Bank activity – limited licenses now issued to 9 foreign banks
 Subsidiary legislation and directives for the new Electricity Law
 Further development of Environmental Conservation Law and Rules (issued
June 2014), including stakeholder and community consent to projects

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Now – how to get the deal done!
 To start, every foreign energy company must meet with MOEP.
 It is likely that all future power projects will go through a bidding
procedure via MEPE.
 Negotiation process between the relevant department and the
foreign investor for any of the Project Documents.
 Submission of the Project Documents to the Union Attorney
General's Office, the Ministry of Finance and the Ministry of National
Planning and Economic Development for their review and comments.
 Application process for the required notifications, permits and
approvals.

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omassmann@duanemorris.com;
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Thank you!
Oliver Massmann – Partner
DUANE MORRIS SELVAM