Lawmakers to Seek Answers on Stalled Kyaukphyu SEZ

By Kyaw Hsu Mon 17 June 2015

RANGOON — Arakanese parliamentarians will propose that the regional legislature discuss the awarding of tenders for the Kyaukphyu special economic zone (SEZ), with an announcement of the winners expected six months ago but beset by delays.

A spokesperson for the Kyaukphyu SEZ bid evaluation committee told The Irrawaddy in March that the project was still in the “negotiations stage” with potential tender winners, but regional politicians appear eager to shed light on a bidding process that they say has lacked transparency.

“We discussed the Kyaukphyu SEZ last November in the state parliament,” said Kyaw Lwin, a lawmaker from Kyaukphyu Township. “The SEZ development committee explained the project, but we don’t know what is happening at the moment. That’s why we’ll raise questions to discuss in the upcoming parliament [session],” with the state legislature expected to reconvene late this month.

“There has been no transparency in this SEZ project since the beginning stage. If this project is not beneficial for Arakanese, we will have to stand by the people,” Kyaw Lwin told The Irrawaddy, reflecting a widespread perception that the terms of the SEZ deal might benefit tender winners at the expense of the local population.

Aung Myat Kyaw, a parliamentarian from Arakan State’s Sittwe Township, said the Kyaukphyu SEZ’s bid evaluation committee owed lawmakers an update on the status of the tenders.

“As far as I know, a Chinese company is a prospect. If the government grants [the tenders] to a Chinese company, they will take a lot of its benefits from us,” Aung Myat Kyaw said.

“We’ve discussed it in the state parliament before; at that time, we felt that the Chinese wanted more [generous] terms, like to take 80 percent interest from this project,” he added.

Three contracts will reportedly be awarded for development of the site’s deep-sea port, petrochemical processing plant and a variety of industrial factories.

Wariness over the SEZ is fueled in part by locals’ experience with the dual “Shwe pipelines,” which pump oil and natural gas from a terminal at Kyaukphyu across Burma to a fuel depot in China’s Yunnan province. Displacement resulting from the pipes’ construction, concerns of environmental degradation and the terms of the Shwe pipeline deal—with China receiving all of the oil and natural gas that passes through Kyaukphyu—have made the project unpopular among the local population.

Burma’s government called for Kyaukphyu SEZ infrastructure tender bids in September 2014. Bidding closed on Nov. 24, with a total of 12 proposals submitted by one local and 11 international firms.

An announcement of the tender winners was initially expected in January, later pushed back to February. That deadline also came and went, with the spokesperson for the SEZ’s bid evaluation committee saying in March that an announcement at the start of the next fiscal year was more likely.

“We have to be cautiously negotiating with this bidder, because it’s a huge project,” a spokesperson for the Kyaukphyu SEZ bid evaluation committee told The Irrawaddy on Wednesday, seemingly indicating that all three tenders would go to a single bidder. “If we make the wrong decision, it will cost us in the long term.”

“But I expect that it can be announced before the next government’s term,” he added, declining to say which companies had been short-listed for the tenders.

A new government is expected to be sworn in by the end of March.

“The huge project should bring equal rights for both country and bidder,” the spokesperson said.

An industry source has predicted that China’s CITIC Group is likely to be awarded at least one of the three tenders up for bid. It is a known contender, having produced a feasibility study in 2011 that estimated project costs at US$14 billion and a land planning area of about 350 square kilometers (217 square miles).

The Kyaukphyu SEZ is one of three major economic zones planned for Burma and will serve as a key feature of the Shwe pipelines energy corridor, transferring gas sourced from the Bay of Bengal and oil shipped from elsewhere into China’s isolated southwestern provinces. The overland shipments of crude could eventually save China millions by avoiding long and costly tanker routes through the Malacca Strait.

With the SEZ bidding process dragging on, locals are also scrutinizing oil and gas exploration and production off the coast of Arakan State.

The Arakan Resources and Environmental Network, a local advocacy group, this week called for halting nine offshore oil and gas fields that it says are being operated without the consent of local Arakanese people.

The offshore concessions were granted to seven oil and gas companies from Asia, Europe and the United States, according to a press release from the network.

“[They] are to inform locals if they want to operate. They should present the operation openly and seek our feedback. We could not monitor and oppose the Shwe gas pipelines because of the Arakanese-Bengali issue,” said the network’s Nyo Aye, referring to the region’s religious tensions, which have pitted Arakanese Buddhists against minority Rohingya Muslims, referred to as “Bengalis” by the government and most of the state’s inhabitants.

“But this time, we will demand the halting of any project that will be implemented or is being implemented without our consent or without informing us,” he told The Irrawaddy.

The Arakan Resources and Environmental Network statement called for direct management of Arakan State’s resources by the regional government.

“As far as we are concerned, [those companies] have signed deals with the Union government. Since the companies are from Europe, I hope they care about human rights and the environment and I think it would be easy to talk with them. The Union government needs to pay heed to the wishes of local people and implement the projects in a transparent manner,” said Seya Kyaw, also from the network.

Nyo Aye said the advocacy group has called for a meeting with Arakan State Chief Minister Maung Maung Ohn to discuss the offshore oil and gas operations.

Additional reporting by San Paw.