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Economic and Power Trading in the Greater Mekong Sub-region
Economic and Power Trading in the Greater Mekong Sub-region
Currently, electricity is an essential part of everyday life and to the economic development of the country. It is expected that are traded and helps to strengthen relationship with neighboring countries. Thailand is a country that has highest income and highest electricity consumption per capita in this sub-region. In the future, Thailand will be the major electricity import country and Laos PDR., Myanmar and Yunnan is a major exporter of electricity because they have a lot of hydro resources.
1. General Characteristic of Greater Mekong Sub-region
The Greater Mekong Sub-region (GMS) compose of 6 member countries, Laos PDR., Cambodia, Myanmar, Vietnam, Yunnan of China and Thailand. This sub-region has an area of 2.3 million square kilometers and population of approximately 250 million. There are many differences in GMS member country such as the abundance of natural resources including cultivation, forestry and fishery, high potential of mineral and plenty of energy resources such as hydro, coal and oil.
Some of the GMS member countries are transitioning their economy model from the centrally planned economy to be the market or open economy. Economic size and structure of the member country are huge different. But all countries have rapid economic growth rate over the last several years until the financial and economic crisis occurred in the ASEAN economies. The sub-region has average Gross Domestic Product (GDP) per capita of 260-1,960 USD, electrification rate of 13-97%, electricity consumption of 34-1,300 kW-hr/year/capita. It was significant different for all member countries.
Table 1.1 : Economic Indicators for GMS countries in 1999
|GDP||1000 Million USD.||3.1||1.4||n.a.||123.9||28.6||n.a.|
Source: Asia development Bank and the world bank forecast
- Gross national product of Yunnan is average 2/3 of China GNP
- Year 2000
2. Economic development in recent years.
The economic growth of all countries before the economic crisis, years 1995 -1996, was high (about 6-10 percent) but after the crisis, year 1997, each GMS country's economy started to slow down. The data in Table 2.1 shows that the impact of each country is different. It is evident that Thailand has the highest impact by the economic crisis. The real GDP growth rate in year 1997 and 1998 are -1.5and -10.8 %, respectively.
Table 2.1 The GMS Countries – Recently Economic Development Change of the real economic growth rate %
GDP year 1999
(1000 Million USD.)
Source; Key indicator for Asia Pacific Country and Future of Asia Development, Asia Development Bank, 2000
1. Estimated number
The major Electricity markets in GMS are Thailand Yunnan and Vietnam. In year 2000, Thailand Yunnan and Vietnam’s electricity consumption are 86,214, 27,696 and 22,241 million units or 61%, 20% and 16% of share on total electricity consumption, respectively.It is shown in table 3.1. This ratio is expected to gradually decline in the future due to Myanmar, Laos and Cambodia, where electricity consumption is trending to rise in the future. The industrial sector is still the main sector that has a high proportion of electricity consumption and it is a key to drive regional electricity demand. While the growth rate of electricity consumption in household sector increases dramatically. This is because the growth of electrical equipment demand, which has not reached saturation point and the electric consumption rate, started from a low base when compared with developed countries.
Table 3.1: The GMS Countries – Peak Demand and Electric Consumption year 2000
|Country/Province||Maximum Peak demand||Electric Consumption|
Source: Power Plant Statistics from each member country.
1. Sum from the peak demand of each country that does not happen at the same time.
The data in Table 3.2 revealed that after the economic crisis in 2007, the use of electricity in GMS countries are increasing at declining rates except Thailand that electricity consumption has dropped at a rate of -2.6 percent in 2008. But after Thailand's economy began to recover in 2009, the power consumption increase continuously especially in 2010 Thailand’s power demand rise up to 8.4 percent.
Table 3.2: Changing in Electricity Consumption Rate in GMS %
Source: power plant statistic from member country
4. Tariff Rate
In 2000, the average tariff in Thailand, Myanmar and Vietnam is about 4.9 to 5.2 cents per kilowatt - hour. While the average cost of electricity in the Laos is PDR. 2.3 cents per kilowatt - hour. This rate is relatively low. Particularly in Laos’s household sector, the Lao government subsidized electricity cost to 1.5 cents per kilowatt - hour. While Cambodia's average tariff equal to 16 cents per kilowatt – hour because the electricity was generated mainly on small and diesel fuel power plants. For Yunnan, China, The average tariff was 3.7 cents per kilowatt - hour. This is because the power plant construction and labor costs are lower than other countries in the GMS. The tariff of the GMS countries in 2000 is presented in Table 4.1.
Table 4.1: The Power tariff of the GMS countries in 2000 Cents/kW-hr
Source: Power Plant Statistic from GMS member country, Asia Development Bank, 2007
Members of the Greater Mekong Sub-region are in cooperation to develop internal electricity trade by connecting transmission and trading of electricity in the region. If these mission successes, it will make the regional power system in secure and promote internal electricity trade within the region. The World Bank study in 2008 indicated that power trade within the region, will reduce the cost of electricity up to 460 billion baht in the 20 years period (2011-2020) and reduce greenhouse gases with valued at 18,000 million baht. This is because the electricity generated was mainly produced by hydroelectric power plant. This trading will make people in the whole region more income and will strengthen economic and social development for the whole sub-region.
Reference: Norconsult, Indicative Master Plan on Power Interconnection in GMS: Power Demand Forecast, Final Report, September 2001