1. Alfonso Guzman, November 22 2013 Institutional Framework and Business Models Approach and Methodology

2. PRESENTATION OUTLINE 2  Context  Lessons learned from international experience  Approach and work plan  Preliminary understanding of institutional situation  Points for discussion

3. Myanmar has a major electrification challenge… 3 The electrification rate 29%... 43 million out of 60 million people have no access...Most of these 43 million people live in rural areas …and nearly 15 million are less than 14 years old

4. ..and the challenge is significant … 4 Source: MOEP, ESE, YESB data and Castalia estimations Assumes 6.5 people in a household ESE YESB Required 189,000 New household connections per year Need to connect close to 4x as many households per year to reach universal access by 2030

5. 1.Responsibilities for service delivery need to be separated from policy setting, planning and regulation 2.Countries with an entity assigned and funded to expand access to electricity have achieved good results 3.Commercial viability of the utility or service delivery agents is key to sustainability 4.Significant increases in access to electricity requires support of public funds 5.Private sector can play a useful role by bringing innovation and capital—but will need incentives to focus in less profitable areas..but lessons on institutional frameworks from other countries could help Myanmar 5

6. Some of Myanmar’s neighbors have succeeded 6 % Households electrified Constant GDP $ 1000s per capita Source: World Bank, One Goal two Paths

7. ..mainly because they have clear institutional arrangements, 7 PhilippinesThailandLaosIndonesiaCambodiaMyanmar Entity assigned to electrification? Yes, NEA Yes, PEA and MEA Yes, EdLYes, PLNNo? Clear funding allocation Yes No? Electrification rate 83% 84%70%31%29% Source: World Bank & Castalia

8. 8 …and have involved private sector where it is feasible PUBLICPRIVATEUSER Program design (lead) Program design (participate) Program design (participate) Program management (promotion, accreditation) Marketing / User Identification Partial capital subsidy Price ceiling TA to solar companies Equipment Procurement / Installation Equipment Cost (minus subsidy): Initial down-payment Loan to MFIsMicrofinancing Micro-loan monthly repayment O&MO&M Cost (when needed; not a monthly fee) User owns equipment Honduras solar program

9. Identify preliminary business models Approach: Phase I and Phase II 9 Informal consultation with GoM (proposed) Map out institutional arrangements Identify institutional gaps and overlaps Identify preliminary institutional options Preliminary findings Adjust options Interim Road Map Workshop III Preliminary Funding assessment Phase I Phase II January 2014 March 2014

10. Approach: Phase III and Phase IV 10 Workshop IV Update business models and identify funding financing needs Initial results from Columbia University Review and update interim Institutional options Draft Final Road Map and Prospectus Final Road Map & Prospectus Phase III Phase IV Develop detailed financial model Updated results from Columbia University Updated feedback from Workshop Revise and detail options June-July 2014 August 2014

11. 11 Preliminary understanding of institutional setup… Strategic Guidance NEMC & REPWC SegmentPolicyFundingPlanningServices On grid Generation MOEP MEPE HGE JVs/ IPPs TransmissionMEPE DistributionMOEP MOEP (ESE/YESB) (> 33kv lines)? ESE? YESB? Private? Regional / Division Government / MOLFRD (<33kv lines)? Off grid Mini-gridMOEP? Regional / Division Government? MOLFRD? ESE? Private? Individual Household Systems MOEP ? MOLFRD? MOI? MOLFRD? MOI? Private?

12.  Which entity or entities will manage the implementation of the National Electrification Plan?  What are the roles and responsibilities for different agencies for: ­Adopting electrification plans? ­Setting the electrification policy and regulations? ­Monitoring and updating electrification plans? ­Coordinating and harmonizing on grid and off grid programs?  What would be suitable business models for engaging the private sector? Points for discussion 12

13. Wellington Level 2, 88 The Terrace PO Box 10-225 Wellington New Zealand Sydney 36 -38 Young Street Sydney, NSW 2000 Australia Washington 1747 Pennsylvania Ave NW Suite 1200 Washington DC 20006, USA New York 200 Park Avenue Suite 1744 New York, NY 10166, USA Bogotá Carrera 7 No. 99-53 Torre 1, Oficina 1424 Bogotá Colombia Paris 7 Rue Claude Chahu 75116 Paris France Contact us 1747 Pennsylvania Avenue NW, Suite 1200 WASHINGTON DC 20006 United States of America T: +1 202 466-6790 Alfonso.Guzman@castalia-advisors.com www.castalia-advisors.com