Foreign Affairs
ASEAN-China Expo rekindles hopes for hydropower project
Last Updated: 2013-09-04 23:11 |
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Talks of resuming the Myitsone hydropower project have grown louder as leaders of China and Myanmar have urged greater cooperation on the sidelines of the 10th ASEAN-China Expo.

Utun Naing Aung, chairman of the Energy and Environmental Group of the Myanmar Industries Association, said that if the joint venture project were put off until 2015, the development of Myanmar's power industry would be delayed for five years.

"To achieve the target of tripling Myanmar's gross domestic product (GDP) by 2030, boosting energy development is necessary," said Utun.

Jin Honggen, an economic and commercial counselor at the Chinese Embassy in Myanmar, said that the Myitsone hydropower station is a win-win project for both sides.

"China has been hoping to restart it," Jin said.

While meeting Myanmar President U Thein Sein on Tuesday in Nanning, capital of south China's Guangxi Zhuang Autonomous Region, Chinese Premier Li Keqiang suggested that both countries should enhance political mutual trust, discuss new thoughts and paths to deepen cooperation and bring greater benefits to local people.

U Thein Sein said that his country is willing to boost strategic communication and expand cooperation so as to promote development of bilateral ties and ASEAN-China relations.

Advocates for early resumption of the Myitsone hydropower station said that the high-profile exchange has rekindled their hopes, calling on both sides to establish an inter-governmental mechanism to facilitate resumption of the project as early as possible.

"Misunderstanding has led to the suspension," said Guo Gengliang, deputy general manager of the Upstream Ayeyawady Confluence Basin Hydropower Co. Ltd., a Sino-Myanmar joint venture to manage hydropower resource development in Myanmar.

Work on the Myitsone hydropower station, the largest of seven hydropower stations to be built under the Sino-Myanmar Framework Agreement on Joint Development of Hydropower Resources in Myanmar signed in March 2003, was suspended abruptly on Sept. 30, 2011 by the Myanmar government under the excuse of public will.

With an installed capacity of six million kilowatts, the project costs 3.6 billion U.S. dollars and is scheduled to begin generating electricity in 2017.


Guo said that the project was originally pushed ahead by the Myanmar government to ease power shortages, as three-quarters of Myanmar people have no electricity access and only 2.5 percent of the country's hydropower resources have been developed, far below the world average of 70 percent.

Guo said that the longer the suspension lasts, the heavier losses will be on both sides, and Myanmar's future development may be seriously impeded.

A feasible way to break the ice is to clear up misunderstandings among the public, he noted.

"Some local people feel it is unacceptable to see 90 percent of electricity produced exported to China. The truth is that Myanmar will not be able to consume the station's annual energy output of 110 billion kilowatts of electricity upon the completion of the seven stations. China's imports actually guarantee its sales," said Guo.

According to the agreement, about 60.7 percent of the return on investment will go to Myanmar, including free supply of 10 percent of electricity produced and 15 percent of the joint venture's free equities and tax revenue. The remaining 39.3 percent would belong to China, he explained.

After China's 50-year concession rights expire, Myanmar can secure the station's assets and operating revenue for another 50 years, Guo said.

As for local people's ecological concerns, He said that more than 100 experts from Myanmar and China had conducted a joint environmental impact assessment for the project, which shows that dam construction will not affect bio-diversity and leave only 1.4 percent of watershed land area submerged.

Dam construction is actually conducive to preventing flooding and sea water from flowing back into the watershed, he said.

Guo also refuted concerns over the dam's earthquake resistance and flood control capability.

The Myitsone dam's earthquake resistance would be much stronger than that of the Zipingba Hydropower Station in Sichuan, southwest China, which withstood the devastating Wenchuan Earthquake of 2008, he said.

The dam is also designed to withstand floods so intense they only happen every 1,000 years, he said.


Two years after the project was suspended, both Myanmar and China have suffered serious losses.

China Power Investment Corporation, the project's main investor, bears not only its initial investment of seven billion yuan, but also 300-million-yuan in annual expenses for financial interests, personnel and equipment maintenance, not to mention massive indemnities claimed by suppliers and contracted builders, according to Li Guanghua, General Manager of the Upstream Ayeyawady Confluence Basin Hydropower Co. Ltd.

The losses on the Myanmar side are also substantial.

If the project continues as planned, 30,000 locals will be employed.

The reality is, however, many of the 18,000 relocated remain jobless, said Li.

Worse still, the suspension has seriously discouraged the confidence of foreign investors in Myanmar.

Statistics show that the country's foreign investment dwindled from 20 billion U.S. dollars during the 2010-2011 fiscal year to 1.49 billion U.S. dollars for the 2012-2013 fiscal year.

According to Li, once put to use, the station is expected to contribute greatly to Myanmar's total GDP annually.

The adverse effects of the project's suspension have spread to the entire power industry. So far, nearly 50 foreign-invested hydropower stations in Myanmar have been put to a halt. A wait-and-see approach is pervasive in the market, Li said.


Li said his company has never given up.

By providing provisions and seeds to relocated people, the company has helped more than 2,000 residents make a living outside the dam area.

"We also strengthened exchanges with locals to communicate about the pros and cons of the project design and optimize our layout so as to reduce construction costs and time once the resumption is approved," Li said.

Utun Naing Aung, chairman of the Energy and Environmental Group, maintained that clean and renewable hydropower should be the top priority of Myanmar's energy development.

The World Bank has also resumed lending to hydropower projects so as to eradicate poverty and reduce carbon dioxide emissions, he noted.

Aung Pan, a relocated farmer who moved out of his thatched roof cottage in the dam area into a two-story wood-brick house, received free power supply and provisions from Li's company. But he is barely happy.

"We hope the hydropower station can resume construction and the joint venture can stay," he said.

"I will pray for the early resumption of the project as it will boost regional development and improve the well-being of relocated people," said Abbot Deizida, who has moved out of the dam area with his temple.

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