China Remains a Key Player in Myanmar's Energy Sector
- Part 1 -

Dr. Puyam Rakesh Singh *

Like every developing country working towards poverty alleviation and industrial development, Myanmar pays more and more attention to infrastructure building to meet its rising energy requirements. Despite some setbacks in the past, the new administration under the leadership of the National League for Democracy (NLD) is likely to open the door to investments from China. Chinese companies invest in oil and natural gas explorations, pipeline and oil refinery construction.

Moreover, many other Chinese companies are involved in hydropower projects, wind power and natural gas-based power generation projects. Under the China-ASEAN Technological Transfer Centre, China looks forward to strengthen cooperation in agriculture, new energy, reusable energy, internet, environmental protection and biochemical industry.

In this endeavour, China-Myanmar technological transfer centre can provide ample opportunities to cooperate in energy. This is where Naypyitaw wants China to play a constructive role in the new development path, and they can explore new areas in power generation as envisaged in Myanmar's Energy Master Plan.

Cooperation in Power Sector

There is a new wave of cooperation in power sector after the suspension of the Myitsone hydro project. Kachin State of Myanmar bordering with Yunnan Province of China has huge potential of hydroelectricity. However, hydropower projects have both social and environmental impacts which stand in the way to smooth implementation of the projects.

Being a key player in hydropower projects, Chinese companies attracted unwanted attentions from the public and organised groups spearheading for environmental protection. In order to cope with the tensions, the two sides held consultations over the changing political dynamics and scope for cooperation in various sectors. In the subsequent exchanges, the issues of corporate social responsibilities and creation of job opportunities for Myanmar nationals were highlighted.

In an open letter sent to Chinese President Hu Jintao dated 16 March 2011, the Kachin Independence Organisation (KIO) warned of a civil war in case the project was not scrapped.[1] The armed conflicts in Northern Myanmar compelled China to pursue an active foreign policy to 'preserve regional stability and promote China's own interests' through peaceful resolutions.[2]

The Kachin Independence Army (KIA), the armed wing of the KIO, disturbed hydropower projects and transport infrastructures.[3] It marked the beginning of the Kachin conflict affecting border areas stability and economic exchanges. In spite of the roadblocks, in August 2011, the two countries agreed to strengthen cooperation in electric power sector.[4]

Instead, suspension of Myitsone Dam was announced in September 2011. Following this, the two sides held consultations meetings to control the damage and build mutual trust. [5] However, the suspension was not revoked during the tenure of President Thein Sein. Thus, Myitsone Dam project worth US$3.6 billion became a central issue in China-Myanmar cooperation.

The new administration under President Htin Kyaw opened a new chapter by announcing to establish a special review committee to look into the project. On 30 March 2016, the new President was sworn in setting a new political stage after decades of military junta. Even after the suspension of Myitsone Dam, the previous government under President Thein Sein made concerted efforts to improve power situation.

During Chinese Premier Li Keqiang's visit in November 2014, the two sides signed an agreement to establish a China-Myanmar Electric Power Cooperation Commission. The joint statement issued on Li's visit agreed to strengthen power infrastructure construction and to set up an inter-governmental power cooperation mechanism and support the cooperation in power projects according to the principles of fairness, transparency, safety and environmental protection.[6]

Besides, a preferential buyer credit loan agreement on Upper Yeywa Hydropower station and a Memorandum of Agreement for 500 MW combined cycle power plant in Yangon (Thakayta) were signed.[7] Again, the two sides re-affirmed commitment to deepen cooperation in the field of agriculture, infrastructure, power, finance, technology, law and security, education and culture.[8]

The first meeting of the China-Myanmar Electric Power Cooperation Commission was held in January 2015. The two sides reached agreement on transparency in conducting both Environmental Impact Assessment and Social Impact Assessment and public consultation over the projects.[9] In May, Union Electric Power Minister of Myanmar Khin Maung Soe held a meeting with officials of the Chinese National Energy Administration (NEA) on progress of electric power projects being implemented.[10]

The two sides agreed to take utmost care of the environmental and social impacts while undertaking such projects.[11] A total of 18 hydropower projects were agreed to be implemented as priority at the second commission meeting. Following these meetings, a MoU on cooperation in power sector was signed during the China (Sichuan)-Myanmar Business Matching Conference in June.[12]

When the former Myanmar President Thein Sein visited China to commemorate the 70th Anniversary of Victory of the World Anti-Fascist War in September 2015, a new foundation was laid to cooperate in power sector. The Joint Press Release carried bilateral agreement on the inter-governmental power cooperation mechanism to enhance power production capacity.[13] Earlier in April, the two sides exchanged on cooperation in key areas like agriculture, electricity and finance.[14]

In January 2016, a Chinese delegation of the State Power Investment Corporation (SPIC) met with Myanmar President Thein Sein to cooperate in electric power sector and conduct feasibility study to prevent flooding from the Ayeyawady River.[15] Myanmar inaugurated the Myogyi Multi-purpose Dam which was constructed with support from the Yunnan Machinery Equipment Import & Export Company Ltd.[16] On 2 February, the third China-Myanmar Electric Power Cooperation Commission meeting was held in Naypyitaw. During the meeting, China handed over the draft agreements on cooperation for electric power sector and implementation of hydropower projects to Myanmar.[17]

The China Three Gorges Corporation signed a Memorandum of Agreement for the Chuangtha Wind Farm Project in Ayeyawady Region. In August 2012, a MoU for development of wind power projects in Chin State, Rakhine State, Ayeyawady Region and Yangon Region was signed.[18] Another major project in power generation is the 106 MW Thakayta gas-fired combined cycle plant in Yangon.[19] The commencement ceremony of the project was held on 12 May 2016. The project will get gas supply from the Zawtika offshore gas field of Myanmar.

According to the Directorate of Investment and Company Administration (DICA) of Myanmar, till the end of February 2016, China was the number one investor with over US$15 billion worth of investments in 126 projects in Myanmar.[20] During the visit of Chinese Foreign Minister Wang Yi in April this year, China expressed willingness to promote cooperation in industrial development and infrastructure building.[21] Stretching it further, China states that a 'stable and economically prosperous' Myanmar contributes to China's 'economic and security interests'.[22]

In June 2016, Chief Minister of Kachin State of Myanmar urged both China and Myanmar to resolve the long-suspended Myitsone Dam issue while meeting with a Chinese delegation led by Chinese Ambassador Hong Liang in Kachin.[23] Protests were held against the visit of Chinese Ambassador and the team of China Power Investment Corporation (CPI) to Kachin State for meeting with local authorities. The meeting was significant in view of the second visit of Aung San Suu Kyi to China in August 2016. During Chinese President Xi Jinping's meeting with her, China expressed willingness to enhance cooperation between the energy departments and find solution to the Myitsone project.[24] Both sides agreed to solve the suspended dam issue.[25]

In fact, the former President of Myanmar Thein Sein put the project under suspension on the ground of public protests over environmental and social impacts. Interestingly, the joint press release between China and Myanmar of August 2016 underlined the increasing importance of cooperation in power sector. It states: 'The two sides will continue to make good use of existing inter-governmental cooperation mechanisms including the economic and trade joint committee, agricultural cooperation committee and electricity cooperation committee, and enhance mutually beneficial cooperation in the fields of economics and trade, agriculture, water, electricity, productivity and finance.'[26] Nevertheless, protests against the project continue unabated.[27]

In the fiscal year 2016-2017, China is the top foreign investor in power sector of Myanmar. China invested in five projects worth US$1.3 billion, according to a report released by the DICA of Myanmar. Under bilateral As cooperation in power sector increases, China plans to invest in 39 hydroelectric projects, five wind power projects and five solar energy projects in Myanmar under Build-Operate-Transfer and Joint Venture system. The power consumption is increasing by 15 percent (300 MW) annually. While the per capita power consumption of Thailand was 2,500 kilowatts (KW), Myanmar's consumption was just about 222 KW.[28]

This figures call for drastic steps to improve infrastructures for power generation. Currently, out of the total installed capacity, hydropower generates 69 percent, natural gas accounts for 29 percent and coal-fired power plants account for just 2 percent.[29] Of the total 10.88 million households in Myanmar, more than 7.34 million households have no access to electricity. Thus, only 33 percent of the Myanmar population has access to electricity. Meanwhile, Myanmar increased the installed capacity of power generation from 3,413 MW in the 2010-2011 fiscal year to 5,029 MW by December 2015.[30]

to be continued...