Myitsone Dam Project on Hold, but Far From Dead

By Seamus Martov 6 November 2013

Back in September 2011 when President Thein Sein issued a decree ordering that construction of the Myitsone dam “be suspended in the time of our government,” the announcement was met with widespread applause both internationally and at home. The ambitious project, which involves building a 152-meter-tall hydroelectric dam at the confluence of the two rivers that form the Irrawaddy, is the brainchild of a giant Chinese state-owned firm, China Power International (CPI).

The recent disclosure by Parliament Speaker Shwe Mann that Thein Sein will not seek a second term in 2015 will likely boost CPI’s not so subtle campaign to have the dam’s suspension overturned. Even if Thein Sein’s successor opts to resume the project, serious barriers remain to restart the dam, as the actual reasons for the project’s suspension were far more complex than Thein Sein’s initial explanation that he was respecting the “people’s will.”

Some three months before the suspension was declared, Burma’s military launched an offensive against the Kachin Independence Organization (KIO), ending a 17-year ceasefire in Kachin State and parts of northwestern Shan State, and turning much of northern Burma into a war zone, including areas close to the dam site. CPI would soon learn how hard it is build a dam in the middle of conflict.

Just weeks after the Kachin conflict erupted, the project was dealt a serious setback when a key bridge on the road between Kachin State and China was demolished with explosives, an action widely believed to have been carried out by the KIO. The bridge located at Kampaiti pass, north of the state capital Myitkyina, was the main way that CPI and its subcontractors shipped dam building equipment from China’s Yunnan’s Province to the project site. Nearly simultaneously, another key bridge on the road connecting Myitkyina to Bhamo was also destroyed, significantly complicating efforts to reroute equipment from China to the dam site via the south.

The resumption of fighting in Kachin State and the destruction of the Kampaiti bridge in particular made moving forward with the project very difficult, if not impossible. Thein Sein’s official suspension of the project was, according to his Kachin critics, a clever ploy to take credit for the dam’s delay, which they say was inevitable once the fighting resumed.

Interestingly, Chinese state media recently blamed the ongoing Kachin conflict as the biggest impediment to resuming the Myitsone project, something largely overlooked by most coverage about the dam’s suspension. Writing in China’s Global Times in September, Ding Gang, an editor with the English-language daily’s sister paper the People’s Daily, wrote, “On the surface, it seems that environmental concerns are the main obstacle to restarting this project.

“But in reality, the key is the conflict between the military and the Kachin Independence Army (KIA) that affects the peace process in north Myanmar [Burma],” he added.

Although the fighting began in June 2011, there were ample signs in the lead-up to the end of the ceasefire that a serious conflict was brewing, most notably in October 2010 when Burma’s state-run media once again started referring to the KIO as “insurgents,” as had been the norm in the pre-ceasefire days. Yet CPI insisted on pushing ahead with the dam, despite the serious ratcheting up of tensions in Kachin State, a decision that would cost the company dearly.

A Kachin businessman with ties to China confirms that CPI and its subcontracts lost vast sums of money once the dam was suspended. According to the businessman, a major factor contributing to these loses was the fighting and the destruction of key bridges in Kachin State, which meant that both CPI and its subcontractors were unable to remove large amounts of specialized dam-making tools and equipment stored at the project site.

The KIO, for its part, made their opposition to the Myitsone dam, but not the other six dams planned for the upper Irrawaddy, well known before the fighting broke out. A March 2011 letter from the KIO’s chairman, addressed to China’s president, reportedly noted that the KIO had already “informed the military government that KIO would not be responsible for the civil war if the war broke out because of this hydro power plant project and the dam construction.”

While the dam remains on hold, CPI continues to keep a small squad of about 50 staff at the dam site, according to an article from the Chinese-language edition of BusinessWeek. They live in the nearby workers’ town, built specifically to house more than 2,000 staff who were imported from China when construction started in 2010. Viewed from a passing boat on the river, the town appears to be well maintained.

In an interview with China’s Xinhua news agency conducted earlier this year, Li Guanghua, chief of CPI’s Yunnan subsidiary, claimed that CPI continued to spend 300 million yuan ($US 49 million) per year on the Myitsone. According to Li, as of March 2013 CPI had invested some 7.3 billion renminbi, the Chinese currency, on the entire upper Irrawaddy hydro project, or about $1.2 billion. If fully implemented, the hydro project would consist of seven dams that would generate more electricity than the massive Three Gorges Dam in China.

Model Village Misery

Prior to the suspension of the dam, more than 2,600 people from villages set to be flooded by the dam’s massive reservoir were forcibly displaced by government authorities in 2010 and early 2011. Most of the villagers, who were largely small-scale farmers, ended up in Aung Myin Thar and Maliyang “model villages,” according to Mungchying Rawt Jat (MRJ), an advocacy group established by landless Kachin farmers. Despite the grand-sounding name, a recent visit to the larger of the two relocation sites suggested that the villages are anything but a model for development.

Many of the relocated families have endured a major drop in their earnings since arriving at the model villages. “My income has gone down 80 percent since moving here,” says Ja Hkawn, a 49-year-old divorcee who formerly ran a small farm and a store at Tang Hpre, a village near the Myitsone confluence. “When we stayed in our old place I could support all eight of my children going to school.”

Compounding her loss of earnings, Ja Hkawn cannot grow much food at her new home because the soil conditions are extremely poor. “We can’t grow anything,” she says. The old villages, most of which have been completely destroyed by bulldozers, had much better soil that provided a steady income for Ja Hkawn and her small-scale farming neighbors, many of whom are now working as poorly paid casual laborers.

Despite the dam’s official suspension, displaced villagers have been barred by government authorities from returning to their fertile farms. “We were so happy when they stopped the project, but then they prevented us from returning,” says Ja Hkawn.

Even if the dam project never goes ahead, it is unlikely that Ja Hkawn and her fellow farmers will ever get their land back. Shortly after the dam’s suspension, Sea Sun Star Company, a firm controlled by Hka Mai Tang, a locally elected Lower House lawmaker for the ruling Union Solidarity and Development Party (USDP), took control of large tracts of the abandoned farmland. Fences built by Sea Sun Star and accompanying signs posted around the fields make it clear that the displaced farmers are not welcome back.

The website of CPI’s Burmese subsidiary Upstream Ayeyawady Confluence Basin Hydropower Co. Ltd. (UACHC) boasts that the Aung Myint Thar model village, built with CPI funds, is “an auspicious place ,” but Ja Hkawn strongly disagrees. She had to spend what little savings she had on rebuilding the home she was assigned because of the substandard quality of construction used by CPI’s local partner, Asia World, a firm controlled by the family of the late drug lord warlord Lo Hsing Han.

The fact that CPI chose Asia World, described by the US Treasury Department as a front for narco-money laundering, to carry out its corporate social responsibility projects is something many observers cite as proof that the firm was not sincere in its efforts to help those affected by the dam. With a 5 percent stake in UACHC, the entity that will operate the dam for a 50-year concession period, Asia World stands to make millions from its involvement in the Myitsone. The majority of UACH is held by CPI’s Yunnan subsidiary CPIYN, which has an 80 percent stake, while Burma’s Ministry of Electric Power controls the remaining 15 percent.

According to a glossy report produced by UACHC, entitled “A Better Tomorrow of [sic] the Ayeyawady River,” Burma will benefit tremendously from the project, earning more than $54 billion for the central government over the dam’s first 50 years. UACHC also says that once the dam is built, the “shortage of residential and industrial power supply in northern Myanmar will be ended forever.” It is a bold claim that sits at odds with the figures in the UACHC report, which shows that 90 percent of the 100 billion kilowatt-hours of electricity annually generated by the upper Irrawaddy dams that CPI wants to build will be exported.

Claims by the CPI and its subsidiaries about the benefits of hydroelectric power are of little comfort to the displaced villagers. Among those displaced are several young women from Tang Hpre who, with few other options available, are now working as prostitutes in Myitkyina, according to a former neighbor.

While CPI has made much fanfare about donating rice to displaced villagers, few of the villagers seem pleased. “They gave us very little compensation. It’s very difficult for us to survive because we have lost so much, much more than what the Chinese businessman have lost,” Ja Hkawn says.