Myanmar’s domestic gas production is plummeting. The country’s biggest gas field, called Yadana, is nearing the end of its lifetime. According to Thai energy data, Thai imports of Yadana gas have dropped 47 percent since the military takeover of February 2021, which has plunged the country into conflict. Less gas production also means less electricity for Myanmar: generation capacity has dropped 35 percent since the coup. The depletion of Yadana has been expected for a long time, and there were plans to develop new gas reserves and renewable sources of energy to make up for it. What wasn’t expected was that the Myanmar military would seize power – a move that has broken the country’s fragile energy system. So what happens next, and how could we fix it?
First, let’s be clear: Myanmar’s energy crisis is a direct result of its political crisis. There is no energy solution without a political change. Foreign investors and local companies pulled out of the country’s energy sector because they lost confidence in the State Administration Council (SAC)’s ability to govern responsibly. This is reflected in the exchange rate: as assets were pulled out of the country, the kyat has dropped from 1,330 to the U.S. dollar on the eve of the coup to around 4,500 to the dollar today. One of the consequences for the energy sector is that importing gas from abroad to generate more electricity would now be prohibitively expensive. At this stage of the conflict, the success of any energy policy depends on a political solution.
Second, a reshuffle of the junta leadership will not solve the problem. The problem is not junta leader Min Aung Hlaing himself but the economic “software” of the Myanmar military. If one thing is painfully obvious after 57 years of military rule, it is that the Myanmar military is terrible at economic policy. On every basic development indicator, Myanmar has performed worse than all its neighbors, whether democratic or authoritarian: education, healthcare, income, roads, drinking water, electricity. The reasons for this can be debated, but one thing is clear: the military does not learn from its economic mistakes. Most SAC policies have been copy-pasted from SLORC and SPDC policies which already failed miserably, such as keeping an artificially strong exchange rate. The SAC, like its predecessors, has sidelined or purged more reform-minded officers.
One of the generals’ most common mistakes is making big announcements without anything to back them up. Pick any issue of the state-run newspapers and you will find pictures of a military man “giving necessary instructions” or “guidance” on economic and infrastructure projects which are never implemented. Since the coup, Min Aung Hlaing has announced dozens of new power plants, almost none of which are progressing.
What about the Thein Sein period, you ask? Why does a sloppy man shower and put on a nice shirt before a first date? The Thein Sein administration’s policies of economic liberalization cannot be understood in isolation from the 2015 election. The economic opening up was a consequence of the political transition. For the first time, the generals were under pressure to deliver something to the people. The SAC’s return to the destructive policies of the pre-reform era is a reversion to the mean, to the military’s comfort zone of isolation, stagnation, and violence aimed at a people who doesn’t want them in charge.
Third, power cuts are going to get much worse, especially in Yangon, because most of the electricity there comes from power plants supplied by Yadana gas. The power supply to Yangon has already dropped by a third since 2020, and industrial activity has had to be curtailed. Unless the SAC can import liquefied natural gas, a solution made much harder by the depreciation of the currency, the power supply is going to keep getting worse.
Fourth, the reconstruction of Myanmar will necessarily be green. It cannot rely on gas production and exports. Other active gas fields will maintain production for some time until they, too, are depleted. Even if there was a political transition to civilian rule tomorrow, it would take years to get new gas reserves online. The Myanmar people and the economy cannot wait that long for the power supply to improve. Building dams is also off the table in the short-term because the construction times are far too long. The only way to rapidly fix the crippling power cuts within a year or two of a political transition is to launch a massive solar and wind construction program, and to resume imports of liquefied natural gas to Yangon. This would also be the least expensive option: solar and wind are now the cheapest sources of electricity in the world.
Finally, less gas means greater reliance on existing hydropower plants that are primarily located in areas with powerful ethnic armed organizations (EAOs). Fighting in northern Shan State cut electricity generation capacity by 20 percent overnight in December last year and again in June 2024. Approximately two-thirds of Myanmar’s power supply is in territory claimed by an EAO. This is not only a problem for the SAC. Whoever claims to govern the union will be forced to find a new energy arrangement with the ethnic nationalities which delivers better results for them.
This rebalancing is best illustrated by the first major power plant built in Myanmar. The Baluchaung 2 hydropower plant in Karenni State was commissioned in 1960 with the goal to power Yangon, some 300 kilometers distant. The ethnic Karennis saw almost no benefits from the project. As late as 2019, I stood next to one of these huge high-voltage towers in the middle of a Karenni village. A local official explained that there was no electricity in the village, while the transmission line buzzed anxiously as power flowed to the lowlands. Since late 2021, the Karenni resistance groups have repeatedly destroyed these power lines. The message is clear: we no longer serve you.
There is a path out of this energy crisis and back to sustainable growth and development. There are three basic conditions to this. The first is a return to civilian rule. The second is a Green Reconstruction Plan, with a simple objective: to build 2 gigawatts of cheap renewable energy in two years. No bloated “master plan” full of projects that never get made, backroom deals with favored companies, or empty announcements. Transparent, international tenders for wind and solar with standardized contracts and guarantees, and high penalties for delays. Make Myanmar the renewable energy powerhouse that it should be.
The third condition is an agreement to pay the ethnic states for the energy services that they provide to the union. This would be enabled by the Federal Democracy Charter announced by the National Unity Government, but needs further elaboration. If electricity is produced by a dam in Kachin State and is consumed in Mandalay, Kachin should be paid accordingly. When Karenni State produces power, Karenni customers should be served first and only the surplus “exported.” Energy should be one of the pillars on which the federal system is built, empowering the states while encouraging greater integration through shared interests: a balanced network of give-and-take rather than the current zero-sum game of extraction.
What we are witnessing in slow motion is the junta losing control of Myanmar’s energy sector. The era of easy money and gas from the Yadana gas field is coming to an end, while EAOs are taking over the country’s major dams. The failure of the SAC is visible in the landscape: just half an hour from power-deprived Mandalay, a solar plant and a dam lie idle next to each other. The solar plant was abandoned mid-construction in 2023, and the forest will soon finish digesting its ruins. The dam is deserted and on June 2, fighters from the Mandalay People’s Defense Force posed for a triumphant picture at the top, towering over their city down in the valley.
The Myanmar military gave itself a 57-year probation period and squandered it, leaving little more than a desolate trail of poverty and conflict while the rest of Asia took off economically. The SAC will fail because the roots of that failure are still there, wreaking havoc on the population, the economy and neighboring countries. One year after the coup, a retired officer told me: “We thought that there was a plan. There is no plan.” Here’s a plan for a post-junta reconstruction of the energy sector: a massive roll-out of renewable energy and a balanced energy deal with the ethnic states.