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AP | Gemunu Amarasinghe
A merchant in a night market uses a candle to illuminate her fish stand in Dhala, a suburb of Yangon, Myanmar.

World Bank to fund Myanmar $140 million electricity upgrade

YANGON, Myanmar – The World Bank is lending Myanmar $140 million to upgrade an aging power plant in southeastern Mon state in a small step toward overcoming the country's chronic power shortages.

Myanmar, which exports natural gas to neighboring Thailand under contracts signed by its former military government, has suffered an energy deficit for years.

The World Bank said Wednesday the interest-free loan will fund a refurbishment of the Thaton gas-fired power plant, increasing its generating capacity by 250 percent without an increase in its gas consumption.

It is the first World Bank loan to Myanmar since the development lender forgave $440 million of unpaid debt in January.

Myanmar, also known as Burma, only recently emerged from a half-century of military rule and isolation, during which time its once promising economy withered. More than 70 percent of people are without electricity.

A lack of funds, rising demand for energy , aging hydroelectric plants and poor grid infrastructure have resulted in frequent power cuts and rationing of electricity during the hot summer months when hydro power generators cannot operate at full capacity due to depleted reservoirs.

"It affects industries, it affects common people, kids cannot study at night because they do not have electricity," said Kanthan Shankar, World Bank country manager for Myanmar.

The bank said the 106 megawatt Thaton plant will provide 5 percent of peak power demand for the entire country and 50 percent of peak demand in Mon state.

Power shortages led to protests early last year in several cities. The government made an uncharacteristic appeal for understanding, saying that rationing was required to cope with greater demand.