In boost for Myitsone, China advising govt on new hydropower policy

Sources have told Frontier that the Chinese government is advising the Ministry of Electricity and Energy on a white paper for hydropower policy at the same time as pressuring Myanmar to revive the long-stalled Myitsone dam.

By THOMAS KEAN | FRONTIER

The future of the suspended Myitsone Dam and other China-backed mega-dams in Myanmar has been given a major boost, with sources telling Frontier that a Chinese government agency is advising the Ministry of Electricity and Energy on a new hydropower white paper.

The ministry has also backed away from endorsing a strategic environmental assessment of the hydropower sector drafted over the past two years with support from the International Finance Corporation, part of the World Bank Group.

The IFC released a final draft of the SEA in May 2018 but learned in August that the ministry was working on the new white paper. When the SEA was eventually issued in November, the only significant change was that the MOEE logo had been removed from the cover.

This has cast significant doubt on the Myanmar government’s commitment to the key recommendation in the SEA: that five of its mainstem rivers, including the Ayeyarwady and Thanlwin (Salween), be reserved from hydropower development.

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Such a move would have blocked billions of dollars of planned investment from Chinese state-owned companies, which have lobbied vigorously against the SEA in public and behind closed doors.

But with China advising on hydropower policy, mega-dams like the 6,000-megawatt Myitsone in Kachin State, which has been suspended since September 2011, are much better placed to proceed – a prospect that seemed remote just a year ago.

Against this backdrop, the Myitsone developer, State Power Investment Corporation, and the Chinese government have begun to push the unpopular project much more aggressively.

Multiple sources confirmed to Frontier that the ministry was drafting the new white paper with technical support from a Chinese government agency, which Frontier understands is China’s National Energy Administration.

The NEA is responsible for energy planning and regulation, and implements the decisions of the National Energy Commission headed by Premier Li Keqiang.

The administration was established a decade ago by the powerful National Development and Reform Commission, which is spearheading the Belt and Road Initiative; the head of the NEA is a vice minister for the NDRC.

Frontier understands that the China Renewable Energy Engineering Institute – a think tank under the NEA, according to Chinese state media – is working with the ministry on the white paper.

The NEA has become a more visible presence in Myanmar since early 2018, when its deputy administrator, Mr Li Fanrong visited, and met State Counsellor Daw Aung San Suu Kyi.

In August and October 2018, Minister for Electricity and Energy U Win Khaing travelled to China for talks with senior NEA officials and Chinese hydropower developers.

The decision to draft a new policy was a shock for the IFC, particularly as the strategic environmental assessment was nearing completion. In July 2018, an IFC spokesperson told Frontier the assessment would be submitted to the government the following month. “We’re hoping to release it not long after that,” the spokesperson said.

But at a working group meeting for electricity sector development partners on August 8, 2018, Win Khaing revealed the ministry was working on a new hydropower policy – a “white paper”, in his words – that would incorporate the SEA.

An IFC representative familiar with the SEA process told Frontier the ministry had still not provided any further details to IFC on the white paper.

“We have heard that the white paper is being conducted by a Chinese organisation, however we do not know the contents of the white paper, or its purpose, or how it links – if at all – to the SEA,” the IFC representative said.

“Our question is, what happens when they do complete this white paper? Will it be in contradiction to the SEA? What does that mean for how they’re going to move forward for their decision-making?”

The IFC representative refused to discuss negotiations with MOEE that resulted in its logo being removed from the report, saying only that the IFC’s priority for the assessment “was to release it to the public in a timely manner”.

MOEE acknowledged receipt of a list of questions from Frontier but did not respond by deadline. The Chinese embassy in Yangon and the China Renewable Energy Engineering Institute did not respond to requests for comment.

Mr Joern Kristensen, the executive director of the Myanmar Institute for Integrated Development, which prepared the SEA together with the International Centre for Environmental Management, said the apparent decision to back away from the SEA’s main recommendation was likely made above the ministry.

“This goes beyond MOEE because obviously the way the Chinese are engaged, it’s at the top levels of government,” he said.

Kristensen, a former director general of the Mekong River Commission, said that the strategic environmental assessment could still prove valuable for the government.

“With the SEA the government now has the tool to enter into the discussions [with China] on what to do and what not to do on hydropower,” he said.

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