On 30/09/11, some media reported that the Myanmar government intended to suspend construction of the Myitsone hydropower project in the upstream Ayeyawady river. This has brought about extensive attention from media both at home and abroad. In this connection, Lu Qizhou, President of China Power Investment Corporation, was interviewed by the Chinese media on Monday.
Q: As China Power Investment Corp (CP!) is the main investor in the Myitsone hydropower project, what can you tell us about reports that the Myanmar government will suspend work on the project?
A: Like you, I learned about this through the media and I was totally astonished. The Myanmar side never communicated with us in any way about this "suspension". Ever since CPI and the Myanmar Ministry of Electric Power-1 signed an MOU [on the Myitsone and Upstream Ayeyawady Basin projects] in December 2006, CPI has always followed the principle of mutual respect, mutual benefit and win-win result in this joint venture with the Myanmar side. We have strictly observed the Chinese and Myanmar laws and regulations, diligently fulfilled our duties and obligations, and acted in compliance with the operating procedures of an international B.O.T project. In March 2009, the Chinese and Myanmar governments signed a Framework Agreement on the Joint Development of Hydropower Resources in Myanmar, explicitly supporting CPI in developing the upstream-Ayeyawady hydropower project.
We hired topnotch hydropower design institutes, research institutes, consultancies and authoritative experts in China to carry out the planning, design, specific study, consultation and supervision of the upstream-Ayeyawady hydropower project. The Changjiang Institute of Survey, Planning, Design and Research is responsible for the planning of the upstream-Ayeyawady basin and the design of the Myitsone hydropower projects. It is also the institute that designed China's Three Georges Project. When we proceeded with the Myitsone hydropower project, technical documents were consulted and reviewed by authoritative organizations and experts, and passed a review organized by Myanmar’s EPM-1. All legal documents, including the application for approval, the signing of a joint venture agreement, a business license for the joint venture, an investment permit, the concession rights and a judicial legal opinion are in strict compliance with Myanmar procedures. Up to the present, all legal supporting documents for the Myitsone hydropower station are complete for both countries. That is to say that the upstream-Ayeyawady hydropower project including the Myitsone hydropower station, which CPI is responsible to develop and construct, is a major project approved by the Myanmar government and CPI has strictly performed all legal procedures in both China and Myanmar. In February this year, Myanmar's Prime Minister urged us to accelerate the construction when he inspected the project site, so the sudden proposal of suspension at this stage is very bewildering. If ‘suspension’ means a halt to construction activities, this will lead to a series of legal issues.
Currently, resettlement in the dam area of the Myitsone hydropower station has been completed, site preparations, including access road construction, water supply, electricity supply, communication and site levelling, have started full scale, and on-site facilities such as roads, a water treatment plant and an oil warehouse already exist in primary condition, a river-crossing bridge downstream fromj the dam-site is under construction, and excavation of the main spillway and the diversion area has also begun.
A huge sum of money has been invested and if this project were to be suspended, the loss would go far beyond direct investment and financial expenses. There would also be a tremendous number of default claims from contractors, a serious loss in the generation of electricity at the construction power plant and a huge increase in the basic investment charges to the other cascade power stations. As a result, the goal of completing the upstream-Ayeyawady hydropower project in time would not be achieved, causing immeasurable losses to both China and Myanmar. At the beginning of 2011, Myanmar and China reached an agreement and relevant banks of both countries signed a RMB loan agreement. To guarantee repayment, the Myanmar government has secured its shares in the Myitsone hydropower station and optioned its expected revenues as the main source of its loan repayment. If the construction of the Myitsone hydropower station were to be suspended, this would seriously affect the implementation of the loan agreement.
Q: Some reports have suggested that the project will bring economic benefits only for China. Your comment?
A: With regard to direct economic benefits, when all the hydropower stations in the upstream-Ayeyawady basin, including the Myitsone station, are finished, the Myanmar government will gain economic benefits of USD 54 billion via taxation and free electricity and share dividends far greater than CPI's return on its investment during the operational period of the agreement. Since the design life of the hydropower stations is over a hundred years, when they are transferred after 50 years of operation, the Myanmar government will have a fixed assets worth tens of billions of US dollars, in addition to hundreds of billions of dollars of direct economic benefits.
In terms of indirect benefits, the construction and operation of a high-grade and large-capacity power station will rapidly improve the power equipment in Myanmar and cultivate a large group of professionals in power construction, operation and management. As a result, Myanmar's electrical industry will leapfrog in its developmental capacities. Moreover, When the Myitsone hydropower station is completed, it will effectively control and reduce the flood peak and raise the anti-flooding standard in downstream area thus reducing loss of life and property caused by downstream floods. Myitkina will be subject to flooding only once in 20 years instead of once every five years. Besides this,750km of roads and hydrological, meteorological and seismic observation stations will be built in the upstream areas of the Ayeyawady. The infrastructure created will create opportunities for the local area to attract business and capital and improve people's livelihoods. In addition, during the construction peak, more than 40,000 workers will be needed, considerably increasing local job opportunities.
Q: Concerns have been expressed that construction of the Myitsone dam would result in increased exposure to flooding and earthquakes. Is there sufficient guarantee for dam safety?
A: The seismic design of the Myitsone dam follows the standard of fortification intensity 9 (FI-9), which is higher than the FI-7 of the Zipingbu hydropower dam that withstood the Wenchuan earthquake in Sichuan in 2008. To further fortify the overall seismic performance of the dam, we will apply reinforced concrete grating to the top of the downstream dam slope and take other seismic fortifying measures. In case of emergency, the surface and middle discharge orifices on the spillway will be able to be used to rapidly lower the reservoir water level and ensure dam and downstream safety. We will build 25 digital remote control seismic monitoring stations in the reservoir area and arrange more than 700 safety monitoring instruments all over the dam in accordance with the safety monitoring standard applied to the world's highest concrete face rockfill dam so as to keep a close eye on the dam's working conditions during operation. “The anti-flood standard of the Myitsone dam is designed as once in 1000 years and ratified with once in 10000 years to ensure safe operation.”
Q: Environmental protection has been a hot topic in hydropower development. Some NGOs in western countries have criticized this project in terms of the environmental damage it would cause. What is your response?
A: Did these organizations help to develop Myanmar’s economy when its people were in a most difficult situation? Now, these same groups are getting in the way when the Myanmar government to trying to carry out projects designed to improve the people's living standards. I don't know what their real intentions are. Hydropower, thermal power, nuclear power, wind power and solar power generation all have some impact on the environment. Sustainable development involves a serious effort to reduce these negative impacts. By common consensus hydropower is the only renewable energy suitable for large-scale development in the modern world.
Compiler’s note: This article has been reduced to about half its original length. Interested users should consult the original for full details of the CPI president’s response to the “suspension” of the Myitsone dam project.
Additional references For more information on CPIC’s Myitsone hydropower project see the following key articles in the compendium: ‘Agreement signed for Upper Kachin hydel projects’ (Myitson)’ (NLM: 02/01/07), ‘Prime minister updated on the Myitson hydropower project’ (NLM: 25/01/11), ‘China’s Investment in Kachin dams seen as cause of conflict’ (IRROL; 16/06/11), ‘President Thein Sein orders suspension of Myitsone dam project’ (IRROL: 30/09/11) and KDNG claims work continuing on CPI projects in Kachin State (IRROL: 05/03/12). For information on the Chipwenge hydropower project which was built to provide the electricity needed for the construction phases of the Myitsone and the Upper Cascades hydropower projects see: ‘Chipwi creek plant to power huge hydel project in Kachin state (Myanmar Times:24/03/08). For further information on the six Upper Cascades hydropower projects in Kachin State see: Appendix 32 (ELEP044). For reports on the environmental impact of all of CPIC’s hydropower projects in northern Kachin State see: ‘BANCA’S critical report on China-backed dam smothered’ (DVB: 18/07/11) and ‘China Power Investment EIA report on Upper Ayeyawady projects’ (CSPDR: G2011). For information on transmission of the power generated by these projects see Chinese engineers planning grid connection (IRROL: 23/01/10).
Commentary on the Myitsone dam suspension and CPI reaction to the decision Compiler’s note: The notes below present the gist of published comments and opinions on the decision to suspend the Myitsone dam project and on CPI president Lu Qizhou’s media interview. Note the reverse chronological order with the most recent articles at the bottom.
Burma Rivers Network’s ten-point response to remarks made by by CPI President Lu Qizhou in his media interview on 03/10/11. http://www.burmariversnetwork.org/resources/publications/13-publications/701-burma-rivers-network-response-to-china-power-investment-corporation-comments-on-myitsone-dam.html
Compiler’s note: I have been unable to find anything in the report prepared by the Changjiang Survey, Planning, Design and Research Co (CSPDR) that supports the claim made by BRN that the Changjiang EIA report favours the “scrapping” of the Myitsone dam site. Everything in this report assumes that the Myitsone dam will go ahead. However, the CSPDR report does recommend that measures be taken to mitigate the downstream environmental impact of the dam, without going into details. In a separate report, the Biodiversity And Nature Conservation Association (BANCA) of Myanmar, which participated in the EIA project organized by CSPDR, presented its view that the Myitsone site was not appropriate for a dam, given its national and historical significance for the people of Burma as the starting point of the Ayeyawady River. BANCA recommended that alternative sites to Myitsone dam be located upstream on the Maykha and Malikha rivers.
Mizzima, 06/10/11. http://www.bnionline.net/news/mizzima/11833-myitsone-dam-agreement-must-be-made-public-if-cpi-sues.html
The Burmese government should make public the terms and conditions in the agreement with China Power Investment (CPI) Corporation if a suit is filed over the suspension of the Myitsone dam project. Also comments by Burmese seismologist Tint Lwin Swe on safety concerns regarding the close proximity of the Myitsone dam to the Sagaing fault line.
Bertil Lintner, Yale Center for the Study of Globalisation, 06/10/11. http://yaleglobal.yale.edu/content/burma-delivers-its-first-rebuff-china
Burma’s rejection of a huge Chinese hydroelectric dam project has raised new questions: Is this a rare victory for civil society in a repressive country? Or does it indicate an internal dispute over the country’s dependence on China? Regardless, the public difference over a close ally’s project marks a new stage in the Burma-China relationship. Burma’s new government seems to have chosen to play “the China card,” an attempt to win support of the West.
Brief comments by prominent Burmese citizens in reaction to the Chinese government's decision to contest the suspension of the Myitsone Dam, including actor Kyaw Thu of the Free Funeral Service Society; Win Tin, senior leader of the National League for Democracy; veteran journalist Ludu Sein Win; Maung Wun Tha, consulting editor of the People's Era Journal; environmentalist U Ohn; former ambassador to China Thakhin Chan Htun; political commentator Aung Kyaw Zaw; Arr Nan, head of Kachin State Social Development Network; Secretary Aye Thar Aung of the Committee Representing the People's Parliament; hip-hop singer Zeyar Thaw; and cartoonist Aw Pi Kyae.
Michael Martina, Ron Popeski, Reuters, 07/10/11. Edited and condensed.
Beijing has pressed for an "appropriate solution" after Myanmar shelved plans for the $3.6 billion Chinese-backed Myitsone dam, the ruling Communist Party's official newspaper, the People's Daily, said on 07/10/11. The article blamed the termination of the project on Myanmar NGOs which, it said, were influenced by foreign media and failed to present “positive information regarding Chinese investors...". Experts from the two countries, the article said, had found the environmental impact of the Myitsone project to be "rather small". China Power Investment Corp, had met the demands of Myanmar's government and used World Bank and Asian Development Bank environmental impact assessment standards, the report said
When Burma’s President Thein Sein took the unusual step of opposing the construction of one of China's largest investment projects in the country – a mega dam – he succeeded in shedding light on the questionable business practices of China’s global dam-building juggernaut. "Many dams built by China overseas are done without reference to international environmental and social standards," says Grace Mang, the China global programme coordinator for International Rivers. "Information and data is also difficult to obtain given the lack of transparency." "The Chinese didn’t want to hear about the social and environmental cost of this dam," says Naw Din Lahpai, editor of Kachinnews.com "They thought an agreement with the authorities only mattered."
South China Morning Post, 20/10/11. Abridged. http://www.burmanet.org/news/2011/10/20/south-china-morning-post-a-lesson-dam-lobby-looks-set-to-ignore-%e2%80%93-shi-jiangtao/
China’s growing ambition to tap into the latent power of international rivers hit a major snag when one of its largest hydropower projects abroad was unexpectedly halted in Myanmar late last month. The suspension of the Myitsone dam project on the Irrawaddy River was seen as a rare victory in a nation long ruled by an authoritarian military regime. What lessons should be learned from the dispute over the Myitsone dam? The fact that China has been snubbed by a long-time political ally that was once dependent on its political and financial support is extremely telling for environmentalists about how unpopular China’s reckless push for big dams and its keenness to flex its economic muscle beyond its borders have been. Myanmar’s new president, Thein Sein, who visited China just five months ago after taking office in March, announced the decision to halt the US$3.6 billion project on the eve of China’s National Day, saying the dam was “contrary to the will of the people”. Apart from concerns about potential ecological destruction on the Irrawaddy and the resettlement of 10,000 people, locals were aggrieved that 90 per cent of electricity generated by the dam was supposed to go to power-hungry China. The dam, with a capacity of up to 6,000 MW, was allowed to go ahead in 2009 despite the CPIC and Beijing allegedly giving the cold shoulder to various local concerns. China’s dam builders and financiers – usually power companies with a national monopoly and banks that are often criticised at home for their blind pursuit of economic profits at the expense of environmental and community welfare – seem to have made little, if any, progress when it comes to business dealings abroad. Such insensitivity to local needs and environmental concerns, as well as a lack of transparency about dam construction projects on rivers that cross China’s borders and in political hot spots, have not only provoked hard feelings that threaten to ruin their business opportunities but have also made China the unwanted focal point of numerous controversies in recent years, Environmentalists have warned that China’s global image and its friendships with affected countries, such as Myanmar – friendships that are often the result of years of political patronage – are also at stake. “The authoritarian government in Myanmar has taught China a lesson, as they appear to be willing to heed public concerns,” Professor Yu Xiaogang , founder of the Yunnan-based Green Watershed NGO, said. He noted that Chinese companies were used to pouring investment mainly into undemocratic countries, where they could focus on forging ties with authoritarian governments while ignoring environmental and social costs and public opinions. Yu said: “Things have changed a lot with the rising environmental awareness, and this type of business strategy has been subject to mounting challenges and is doomed to fail.”
Nirupama Subramanian, The Hindu, 03/11//11. Excerpt from a telephoned interview with prominent Burmese scholar and author Thant Myint-U. http://www.thehindu.com/opinion/interview/article2592036.ece
Q: The cancellation of the Myitsone dam that was being built by China was dramatic. Are you surprised the Myanmar regime took the risk of annoying a powerful neighbour like China? How did the government summon up the courage to kick the Chinese in the teeth on that one?
A: I would have been surprised a year ago, perhaps even six months ago, but not when it happened. It was just one of many developments that had taken place, that would have been unthinkable a year ago. The environmental movement in Myanmar is not inconsequential and the dam had attracted a lot of negative publicity. Myanmar newspapers, much more free to write what they pleased, were full of stories and interviews critical of the dam and environmental mismanagement generally. The decision to suspend work on the dam was taken not so much to send a signal to Beijing, but to demonstrate at home that this new government was willing to listen to popular concerns.
Ba Kaung, IRROL, 28/11/11. Excerpt. Edited. http://www.irrawaddy.org/article.php?art_id=22552
As if to reassure China that the visit of U.S. Secretary of State Hillary Clinton to Nay Pyi Taw doesn't mean that Burma is turning its back on its giant neighbor, the new commander-in-chief of the Burmese armed forces, Gen Min Aung Hlaing, is in the Chinese capital for talks with Vice-President Xi Jinping. According to a report by China's state-run Xinhua news agency on 28/11/11, Min Aung Hlaing pledged to strengthen military exchanges and cooperation with the PRC, while the Chinese leader called on Burma to properly settle problems and maintain bilateral development projects—a reference to the abrupt suspension of the Chinese-backed Myitsone dam project in September, a move that put other, even bigger projects in question.
Melody Kemp, Asia Times, 07/02/12. Condensed. http://www.atimes.com/atimes/Southeast_Asia/NB07Ae01.html
A PowerPoint presentation made by a delegate to the recent Mekong Energy and Ecology meeting in Bangkok indicates that China's hydro-power industry is working hard to resurrect the shelved Myitsone hydropower project. The Chinese Hydropower Association, government officials and Chinese media have all accused Myanmar's government of breach of contract and of being in the thrall of foreign, read Western, non-governmental organizations that have campaigned steadily against the mega-project's potential negative environmental and social impacts. Chinese hydropower interests continue to assert that the environmental impacts of the dam would be minimal. That is the portrait painted by the upstream Ayeyawady Confluence Basin Hydropower Corporation, a local subsidiary of the China Power Investment Corporation, one of China's top five electricity producers, in their latest publication "A Better Tomorrow on the Ayeyawady River." Zhang Boting, deputy secretary general of the Chinese Society for Hydropower Engineering and who writes for the People's Daily newspaper, has led the propaganda offensive against Myitsone's suspension. In a recent newspaper column he referred to President Thein Sein's safety concerns over the project as "“illogical". Striking a more assertive pose, he also recently wrote: "It is impossible that the investor move the hydropower projects out of Myanmar ... If the Myanmar people are at risk, the investment by the investor is at risk as well. The investor and the Myanmar people are both stakeholders in dam construction." The now stalled joint venture agreement between the CPI and Asia World involves many powerful interests. The deal enabled CPI to build and operate Myitsone in partnership with Myanmar Electric Power Enterprises and a consortium of Chinese companies, including the China Gezhouba Group Corporation, whose contract is worth $153 million, China Power Investment Corporation Materials and Equipment Company, whose concrete work had been priced at $75 million and the politically connected Sinohydro Corp, which was responsible for road building and civil engineering. Despite those big commercial interests, Thein Sein said he was responding to the "will of the people" in suspending the dam. The decision has raised bilateral tensions, with China's Ministry of Foreign Affairs spokesman Hong Lei saying in October soon after the announcement that Myanmar must "protect the legal and legitimate rights of Chinese companies". It's unclear if Myanmar has paid any compensation since the mega-project was stalled.
Ba Kaung, IRROL, 17/02/12. Edited and condensed. http://www.irrawaddy.org/article.php?art_id=23057
China Power Investment Corporation (CPI), the major investor in the suspended US $3.6 billion Myitsone dam project in Burma, has reportedly embarked on a public relations campaign in Kachin State in the hope of restarting the project in the near future. On 16/02/12, media groups inside Burma reported that over the past two weeks, CPI employees have been distributing pamphlets extolling the benefits of the megadam project to locals in Aung Myaytha and Mali Yang villages near Myitkyina, the capital of Kachin State. A villager in the area was quoted in the report as saying that “the pamphlets said that the Myitsone project will benefit the local residents and it will not have any negative impact because it will be constructed in a very systematic way.” Recent reports also indicate that work at six other hydro-dam sites in Kachin State is ongoing despite the suspension of construction at the Myitsone site.
Chinese officials have urged Myanmar’s government to restart a Chinese-backed multibillion-dollar power dam project that was suspended apparently without notice last year. The officials, speaking on the sidelines of China’s annual legislative session, said the dam would produce badly needed electricity for Myanmar and raise living standards, the official China Daily reported Sunday. It quoted a former head of the National Energy Administration, Zhang Guobao, as saying the dam is a good project that will bring local residents a better life. It also quoted Lu Qizhou, president of China Power Investment Co., which is providing the financing for the project, as saying the company will do all it can to avoid negative environmental impacts from its projects. “Myanmar is our friendly neighbor ... we hope to restart the project as quickly as possible,” Lu said. Both Lu and Zhang are members of the Chinese People’s Consultative Committee, an advisory body to the annual National People’s Congress being held in Beijing. China Power Investment Corp., which has threatened legal action over the move, is a state-owned company, and its website says it operates under the leadership of the State Council, which is China’s Cabinet.
This is an English translaltion of a set of three articles entitled ‘Behind Myanmar’s Suspended Dam’ by Qin Hui, a history professor at Tsinghua University in Beijing. The articles, originally published in China’s Economic Observer, were translated by Roddy Flagg and posted on ‘the third pole’ section of China Dialogue at the end of March 2012. Unlike many who have written on the subject of Chinese investment in energy projects in Myanmar, Professor Qin Hui took the time to go to Myanmar and interview his sources on the spot. His comments that it was the KIO which originally attracted Datang and the China Power Investment Corp to invest in hydropower projects in Kachin State have come under attack by KIO representatives (see article below), but his overall presentation is one that is full of insights into the current state of affairs in the country as a whole and Kachin State in particular. The series is well worth a read by anyone interested in the question of Chinese investment in Myanmar and its energy industry in particular. “The military government had no ideology or symbols around which to rally the people, and became a historical rarity: a government relying solely on military power to retain its privileged position. Against this background, how can Chinese investments, particularly major strategic investments, ever be safe?”
Colin Hinshelwood, Patirck Boehler, IRROL, 30/03/12. Edited and condensed.
KIA Vice Chief of Staff Gen. S. Gun Maw has denied that a letter was ever sent to the China Power Investment Corp (CPI) requesting profit-sharing on the Myitsone Dam construction project. An article in the Chinese edition of Bloomberg Businessweek earlier in March quoted the general manager of CPI’s Yunnan provincial branch, Li Guanghua, as saying that a letter had been received from the KIA at an initial stage of project requesting "talks to discuss the distribution of interests”. “After consideration, the letter was thrown into the dustbin,” Li was quoted as saying. In another recent article, in the Chinese daily Economic Observer, Qin Hui, a historian at Beijing’s renowned Tsinghua University, also alleged that KIA and its political wing, the Kachin Independence Organisation (KIO), had attempted to cooperate with Chinese investors on the hydropower project.“In fact, it was the KIO that first attracted Chinese investors to the region’s hydropower potential,” Qin wrote. However, “certain Chinese companies … cast the KIO aside, causing the angry separatists to change their stance on several projects.”