Myitsone Dam Hangs In The Balance

WITH LESS THAN a fortnight left before the commission set up to assess the trade-offs between the economic benefits and the social and environmental damage of planned hydropower dams on the Irrawaddy (seen above) is due to submit its report to Myanmar’s president, word is emerging that the commission may recommend that the controversial Myitsone dam project is scrapped. If so, that would kick a potentially politically prickly decision to President Htin Kyaw (nominally) and (in practice) de facto leader Aung San Suu Kyi’s new NLD-led government.

The $3.6-billion-dollar dam is heavily China-backed. China Power Investment Corp. (CPI) is financing the 4,600MW project and Sinohydro doing the construction — such as it is to date; then Myanmar President Thein Sein suspended work on the dam in 2011 in the face of local protests over village displacement, traditional livelihoods being at risk and dissatisfaction that China will get 90% of the electricity generated.

Beijing has since been pushing hard for a resumption of work, and at times it has seemed set to restart. In March, Vice foreign minister Liu Zhenmin called the project crucial for China.

While China has six other hydroelectric projects in Myanmar, not to go ahead now with Myitsone would rupture relations between Beijing and the new democratically elected government in Naypyidaw. Aung San Suu Kyi has been carefully rebuilding the relationship with Beijing, coloured by its support for the former military dictatorship and her desire to open Myanmar to a broader range of foreign investors.

However, when she visited Beijing in August, the Myitsone dam was conspicuously absent from a range of projects on which she and her hosts agreed to enhance their cooperation. The two sides agreed to no more than “to work together find a solution to the issue of the stalled Myitsone Dam project”. Termination of Myitsone would set precedents for other unbuilt or in-construction Chinese-backed infrastructure projects in the region that would be unwelcome to China’s ‘One Belt One Road’ aspirations.

However, cancellation of Myitsone would be popular within Myanmar. Myitsone is in Kachin state. Many ethnic Kachin reportedly said they voted for the NLD in the recent historic elections because they saw the party as their best hope of getting Myitsone stopped.

Alienating those voters risks making the NLD government’s hoped-for settlement with Myanmar’s ethnic armed groups more complicated. The armed wing of the Kachin Independence Organisation, the Kachin Independence Army (KIA), is one of those still fighting the government.

Beijing will not want an even more unstable border than it has now. Since the breakdown of a ceasefire between the KIA and the Myanmar military in 2011, It has already had to take thousands of Kachin refugees fleeing the conflict into camps on the Yunnan side of the border. It has brokered talks between the KIA and Naypyidaw in the hope of bringing some stability to the area.

There is a thriving but illicit trade in gems, timber, drugs and increasingly people across the border. China is also the biggest (legitimate) purchaser of Myanmar’s jade, has two oil and gas pipelines that pass through Kachin state and six other dam projects apart from Myitsone, the most notable of which is the Dapein Dam 1, which started generating power in 2011.

There is more than a single dam project in play. Myitsone will be being weighed in the balance of that greater calculation in both capitals while frantic efforts are made to see whether there is any face-saving deal that can be struck. Stakes are high on both sides. As a result, we may well not see the details of the commission’s report when it is handed over on November 11.

Damming The Mekong

While Myanmar appears to be pressing ahead with dam construction for hydropower plants in the face of environmental concerns, Laos is being more cautious. Or at least giving the appearance of being so. Viraphonh Viravong, the country’s deputy minister for energy and mines, tells the state-run Vientiane Times that Laos will not start building its controversial Xayaburi dam on the Mekong river until it has resolved all concerns about potential impacts.

The measure of Viraphonh’s words, and the environmental impact review being conducted by two sets of international consultants, Poyry from Finland and Companie Nationale du Rhone from France, will be being watched closely by China’s giant state-owned dam builder Sinohydro which is involved in at least eight of 25 dam-building projects in Laos for which Chinese firms are contractors, though Xayaburi is not one of them. Other Chinese companies with a similar interest include China International Water and Electric, China Southern Power Grid, Datang and Gezhouba.

Viraphonh said there are two issues with what at 1,260 MW would be Laos’s  largest hydropower plant. They are fish migration and sediment flow, both, according to environmentalists, critical to sustaining the Mekong’s ecosystem. Four dams exist in the narrow gorges of the Upper Mekong in China but until now there have been none on the slower moving lower reaches of the river. China’s damning has made downstream hydropower plants more economically feasible by smoothing out the seasonal flows of the Mekong.

A report for the intergovernmental Mekong River Commission published in October 2010 said that given the far reaching potential effects on the ecosystem, any construction should be delayed for 10 years to give time to plan for more sustainable hydropower development. However, a multi-billion dollar contract to build Xayaburi was signed in April with Ch. Karnchang, one of Thailand’s leading construction companies. Preliminary work has started regardless of deputy ministerial statements.

Sinohydro Looks To Restart Work On More Myanmar Dams

Sinohydro, the Chinese state-owned contractor for Myanmar’s suspended (for now) Myitsone dam project near the headwaters of the Irrawaddy river and China’s leading dam builder, faces a new environmental and reputational challenge now the government in Naypyidaw has approved construction of the controversial Hatgyi dam on the Salween river.

The isolated Salween is one of the world’s longest free-flowing rivers. It rises on the Tibetan plateau and courses through the canyons and gorges formed when the plates of the Indian subcontinent and Asian mainland met. For much of its 2,800 kilometers, the river flows through Yunnan, where it is called the Nu Jiang. Then it cuts through the eastern edge of Myanmar and marks 120 kilometers of the border with northwestern Thailand, a portion of which is shown in the photo above, before turning back into Myanmar to reach the Andaman Sea at the old teak trading port of Mawlamyaing.

En route, it flows through the watershed known as the Three Parallel Rivers of Yunnan, a UNESCO world heritage site. The river is so environmentally sensitive and biodiverse that local protests forced Beijing in 2004 to cut plans to build 13 hydroelectric dams along its own stretch of the river to four, and then in 2009 to suspended even those pending a still uncompleted environmental review. One of the proposed dams would have been bigger than the Three Gorges dam.

The $1 billion 1,200 MW Hatgyi dam is one of at least five hydropower plants planned for the Myanmar leg of the Salween by a partnership of the Myanmar and Thailand state electric utilities (see map, right, from the environmental group, Salween Watch). Hatgyi’s go-ahead follows the signing of a peace deal between Naypyidaw and ethnic Karen rebels. Sinohydro, which was given the contract to build the dam in 2006 before fighting stopped construction starting, has reportedly been stockpiling equipment and material at the site since mid-April in preparation for a resumption.

Environmental groups are gearing up again to block construction, saying it will destroy traditional village life along the ecologically fragile river, forcibly uprooting local populations and flooding farmland. Periodic local protests against the project have been staged since 2004, the most recent in March.

Sinohydro is also the contractor for another proposed dam on the river that could now go ahead following a peace agreement between Naypyidaw and a different group of ethnic rebels, in this case the Shan. The $6 billion 7,100 MW Tasang dam is planned to be the one of the highest in southeast Asia, taller than the Three Gorges. China’s state-owned Three Gorges Corp., which built and runs the Three Gorges dam, is a sub-contractor to the Tasang dam project. Some 60,000 villagers will have to be relocated to build it. Sinohydro has reportedly started surveying work there. As with Hatgyi, most of the power generated will be sold to Thailand and China.

The Tasang, Hatgyi and Myitsone dams are just three of 56 hydrodam projects in Myanmar proposed, under construction or completed that Chinese companies are involved in, according to a count by International Rivers, a riverine NGO. Sinohydro is involved in at least 17 of them, equivalent to one in eight of all its 132 current dam projects outside China. The international expansion of its business is leading the company to be more environmentally and socially responsive than it was in the past. The extent to which it will need to be in Myanmar may most depend on how rapidly the government in Naypyidaw wants to push ahead with opening the country to rapid development, and how well the economic rationale for projects originally intended to provide export earnings to fund a military dictatorship that has now stepped back from power hold up.

Pressure To Restart Work On Myitsone Dam Intensifies

Beijing continues to press Myanmar to allow a restart to work on the Myitsone Dam. Myanmar’s President Thein Sein unexpectedly and unilaterally pulled the plug last September on state-owned China Power Investment Corp.’s controversial hydropower project in Kachin state near the headwaters of the Irrawaddy river. The issue was again raised by foreign minister Yang Jiechi during his Myanmar counterpart’s visit to Beijing this week.

Meanwhile, CPI is pressing ahead with a new feasibility study addressing the environmental and social impact of the dam, this Bystander understands. It is recruiting a group of international dam-building experts for the task. Contrary to some reports, this is not being done by the Paris-based International Commission on Large Dams (ICOLD), an influential industry standards group, according to a statement the organization issued at the end of last month. It did confirm that CPI had “directly asked experts coming from countries with long term experience in building and operating large dams to assess its work”. It also said that Myanmar had applied for membership of ICOLD, whose current president happens to be from the China Institute of Water Resources and Hydropower Research.

CPI and its sub-contractor Sinohydro have kept about 200 workers on site regardless of the suspension. As we noted before, any resumption of work would have to wait until the end of the rainy season in October. But the increasing pressure form Beijing is making hitting that deadline look increasingly likely.

Work To Resume On Myitsone Dam?

This Bystander is getting reports that suggest Myanmar may be gearing up for the resumption of work on the Myitsone Dam, if not immediately then at least once the summer rains are done. Myanmar’s President Thein Sein unexpectedly and unilaterally pulled the plug last September on state-owned China Power Investment Corp.’s hydropower project in Kachin state near the headwaters of the Irrawaddy river. We now are told that in the past two weeks Myanmar government soldiers have been re-evicting 100 local villagers who were originally relocated from the area but since the project’s suspension have returned to reclaim their old homes. Soldiers have also been leveling the remains of the village, according to Kachin activists.

Ethnic Kachins, who have been fighting the Nawpyidaw government for greater autonomy for their state, particularly since a 17-year old truce broke down last June, have been at the forefront of the opposition to the dam. Environmental groups say it will damage the ecology of the Irrawaddy, the country’s main waterway. Some 2,000 villagers were moved out of five villages in 2009 and 2010 so construction could start. Apart from being removed from ancestral homes that will be submerged by the reservoir created to feed the turbines, they complain that they have been resettled on land too barren to farm.

The latest round of clearances followed by a week a call by China Power Investment’s president, Lu Qizhou, to restart work on the dam. President Thein had said it would remain suspended for the duration of his term of office, which runs until 2016. But we here the sounds of backtracking. Reports say a compensation deal has been hacked out and discussions continue to get work restarted. Yet it remains a thorn in the side of relations  between Beijing and its old ally in Naypyidaw, which is now as less steadfast one as it opens more to the outside world. The fighting in Kachin, refugees spilling over the border into Yunnan and drugs- and gun-running are making China’s western reaches more unsettled than Beijing cares for.

Plus it wants the power. The Myitsone dam was to be the first in a series of seven on the upper Irrawaddy that would eventually supply hydropower to western China. Planning work on the other six has continued and China Power Investment employees have remained on site at Myistone, where, we are told, they have been mining for gold with CPI’s Myanmar partner in the dam project, Asia World, Myanmar’s Mining Enterprise No. 2 and Hka Ka Bo Mining.

Large-scale panning of gold on the Irrawaddy and Chindwin rivers is to be banned when existing one-year mining permits expire later this year. Discharges of mercury and the other highly toxic waste chemicals are polluting the rivers, while the open mining is eroding the top soil. We have no independent confirmation of CPI gold mining, but many gold mines in Kachin state not operated by the military and their friends are operated by Chinese interests. Truckloads of gold-containing earth are seen being driven back to China for processing.

It may be the re-evictions are to prevent interference with the gold-mining operations. One other factor to consider is the weather. Work on the dam would anyway be suspended during the rainy season, from June to October. Many workers from Sinohydro, the sub-contractor building the dam for CPI, were already off-site last year when President Thein made his announcement about suspending the project. Even if work restarted tomorrow, there would be only two months before the rains come. Yet such is the political pressure from Beijing to restart the project, a resumption of work once they cease looks a more than fair bet.