YOMA STRATEGIC Holdings Ltd (YSH) has joined with International Finance Corporation (IFC) and Norfund to invest US$28 million in Yoma Micro Power Pte Ltd, which will implement solar power plants and mini-grids to power telecommunications towers and off-grid communities in rural Myanmar. Melvyn Pun, chief executive officer of YSH, said.
He said at a press conference on Tuesday the partnership with IFC and Norfund marks a huge show of confidence in the viability of the project.
“Electricity can improve livelihoods of the people. So, we believe these solar plants and mini-grids can be a very strong complement to the national grid, as it will provide much better access to electricity to the people of Myanmar,” he said.
He said the recent success of the 10-site pilot scheme in Sagaing Region demonstrates the reliability of the project, and all the partners are eager to roll out quickly to build scale. He added the firm looks forward to working closely with the government, telecom companies and the rural community.
Having invested $2 million since last year, the Sagaing pilot has provided reliable electricity to 10 telecommunications towers, four villages and 700,000 people. The project will be expanded to other regions in the Dry Zone, including Magwe and Mandalay, this year. Coverage would then be expanded to the whole country over the longer term.
“It is very important for us to discuss with the local community, understand what their needs are, and who has the highest demand for power. This is an area in which we want to make we have sure strong partnerships with many local companies,” he said.
According to Pun, YSH will hold 35 per cent, while Norfund and IFC will hold 30 per cent each in Yoma Micro Power. The remaining 5 per cent will be held by Alakesh Chetia, who leads the initiative.
Chetia, CEO of Yoma Micro Power, said a few hundred solar plants would be built in rural areas with no access to the national grid by next year, and thousands of plants would be built over the next few years.
“Due to the rapid reduction in the cost of solar panels and batteries, solar-powered mini-grids have emerged as a viable alternative for rural electrification which can be deployed rapidly and financed with private capital,” he said.
“Our mini-grids offer an efficient pathway to rural electrification as we are able to provide an on-grid experience to rural villages that may otherwise have to wait 10 or more years to obtain grid electricity.”
Currently, 70 per cent of Myanmar’s population is not connected to the national electricity grid. The demand for power far exceeds the available production capacity, resulting in regular blackouts, according to the World Bank.
Chetia also revealed the firm’s business model in which solar plants provide electricity to telecommunications towers and the mini-grid provides electricity to the surrounding communities, including households, schools, shops and businesses.
He said the minimum package for household use would be charged at 5,000 kyats per month, and customers can pay for the electricity service by cash or via Wave Money, the nation’s leading mobile financial services provider.
The firm aims to electrify hundreds of telecommunications towers and rural communities across Myanmar this year, with the potential to scale up to more than 2,000 micro power plants by 2022.
“As the coverage and the number of solar plants expand, the number of people we cover will keep growing in the future,” said Chetia.
“We are trying to make sure that our project really benefits the rural community. It is a very robust and sustainable infrastructure. We will keep on expanding in the next three to five years.”
Vikram Kumar, IFC country manager for Myanmar, said the approach fits with IFC’s efforts to promote social inclusion through the provision of basic infrastructure to underserved segments of the rural population.
“We believe the business model presents great opportunity to provide clean and dependable electricity to a large number of rural citizens, with the scale-up of the business approach going forward,” he said.
The IFC has pledged to invest US$13 million in the project - US$7 million in equity and the rest through a concessional loan.
“Although this investment looks small, it is important to us because this project has meaningful impacts on the livelihoods of Myanmar people,” said Kumar.
He said IFC would focus on improving access to finance and access to electricity, considered as the biggest challenges of small and medium-sized enterprises in Myanmar.
Fay Chetnakarnkul, investment director and head of Asia at Norfund, shared this view. She believes the organisation’s investment in the project will result in improving rural education and SMEs’ development in Myanmar. She said Norfund would also invest in two microfinance companies to boost financial inclusion.
“With respect to energy, we really believe that it should be clean energy, and we really like their business model,” she said.