WSG Article: Myanmar: Amendment of Electricity Rules

Myanmar: Amendment of Electricity Rules

April, 2022 - Segolene Leffy

On 28 February 2022, the Ministry of Electricity and Energy (“MOEE”) under the State Administration Council (“SAC”) of Myanmar published the Rules Amending the Electricity Rules (“Amendment”) with approval from the Union Government formed by the SAC.

The main features of the Amendment are as follows:

Rule 11 of the Electricity Rules (“ER”) states that the Ministry of Electric Power (now read as MOEE) may, with the approval of the Union Government, approve non-cost-based tariffs that result from the operation of competitive power markets or circumstances. The Amendment has deleted the expression “non-cost based” from Rule 11.
The Amendment has added Rule 14-A to the ER, stating that the MOEE may, with the consent of the Union Government, allow any Myanmar citizen or foreigner, who wishes to invest in the power market, to conduct a large-scale exploration and feasibility study before applying for the Generation Permit.
The Amendment has substituted Rule 19 of the ER to be more comprehensive and states that permitted persons who have been issued Generation Permits shall abide by the following:
1. Applicable laws and regulatory requirements;
2. Environmental requirements;
3. Operation of the generation facility shall be consistent with the safe, secure, and economic operation of the National Grid and distribution networks; and
4. Settle payments for compensation, to the aggrieved persons who have been approved by the MOEE, for voltage support and any uneconomic dispatch required to support the transmission and distribution systems due to any failure to comply with the above sub-rules (a), (b) and (c) herein.
The Amendment has substituted Rule 50 of the ER to state that the business activities of the permitted person who has been issued with the Wholesale Power Supply Permit shall conform with the relevant laws and regulatory requirements, all industry codes, and performance standards, and environmental requirements issued by the MOEE. Previously Rule 50 read that the Wholesale Power Supply Permit would include the conditions to require the activities permitted person to satisfy applicable laws, regulatory requirements, and industry codes. With the amendment, compliance with laws, regulatory requirements and industry codes has been made a more general and all-inclusive requirement.
In issuing permits under the Electricity Law, the MOEE shall consider an additional factor, i.e., the feasibility study report approved by the MOEE. This would be added as sub-section (viii) under Rule 74 (b) of the ER.
The Amendment has added Rule 91-A which states that the MOEE shall appoint the chief inspector with the consent of the Union Government to inspect electricity-related works and electrical appliances.
The Amendment has added an additional sub-clause to the section on Suspension and Cancellation of Permit. Sub-rule (d) has been added to Section 79 of the ER that states: If the Union Government decides to terminate the electricity-related works, that are currently operating, due to any political, economic, social, and national security concern, the MOEE shall revoke the permit. The addition of this clause provides wide discretionary powers to the Union Government formed under the SAC to terminate electricity works and revoke permits. Considering that this clause has been made a part of the ER, it would be important to observe how the clause plays out with governmental force majeure and change in law clauses under relevant project agreements (such as a power purchase agreement). The rules do not establish any legal recourse for investors, and investors should carefully negotiate contracts to protect their interests considering Rule 79 (d).

The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.