NGOs Step up Pressure on Firms Bidding to Exploit Burma’s Resources

By William Boot 23 May 2013

Burma is still far from being open and transparent on many issues of business and financing, but one consequence of the Thein Sein-led reforms is that the outside world is looking in more closely and critically.

In the past few weeks alone, Burma’s business dealings have come under close scrutiny from several international organizations, even urging some foreign companies to reconsider doing business in Burma at all until conditions improve.

And most of these organizations are based in the United States, where President Thein Sein has just become the first Burmese leader to visit the White House for almost half a century.

The latest call for caution comes from International Rivers, a US-based environmental and human rights NGO, which today submitted a petition to shareholders of the giant Chinese hydroelectric project developer Sinohydro Corporation, whose annual meeting was held in Beijing.

Sinohydro is a joint-venture partner in planned massive hydroelectric dam projects on the Salween River at Hat Gyi and Tasang in eastern Burma.

“Local groups affected by Sinohydro’s Tasang and Hat Gyi hydropower projects are today urging Sinohydro at its Annual General Meeting to wait until peace negotiations are completed and stability has been established before taking any further actions to advance the projects,” International Rivers told The Irrawaddy.

The dams are in Karen and Shan conflict zones.

“Field surveys in 2012 and 2013 conducted by Sinohydro and its contractors have heightened tensions in the area. Militarization of the dam sites has preceded each field survey, which has fueled anxiety and tensions in the community because they have not been informed about the projects, nor has their consent been obtained,” said International Rivers.

If the two hydro-dams went ahead, they would have a potential electricity-generating capacity of 8,290 megawatts—more than that planned for the halted Myitsone hydro project on the Irrawaddy River and more than double Burma’s current overall generating capacity.

Most of the planned Salween dam power is designated for transmission to China and Thailand under current development agreements with the Naypyidaw government, said the NGO Burma Rivers Network.

Another US-based NGO, the Revenue Watch Institute, has suggested that Burma’s future would be best served if all 30 of the offshore oil and gas exploration blocks now open for bidding were won by companies only from Norway, Britain and the United States.

Those three countries are the only ones out of 58 oil and gas producing states which came close to a full score for good governance and transparency. Burma came last in the institute’s Resource Governance Index, scoring less than 30 out of 100 points.

“Citizens lack access to fundamental information about the oil, gas and mining sector. For instance, a country might provide little or no information about which companies, domestic and foreign, operate in the extractive sector, how much the government collects in resource revenues and where those funds are allocated,” said the institute in its report.

A business risk assessor said Burma’s oil and gas sector was particularly hazardous for foreign companies concerned about a possible backlash from shareholders over bad publicity.

“In the medium term, foreign petroleum companies investing in [Burma] will continue to face risks connected to deeply-entrenched corruption and on-going human rights violation in the country,” senior analyst Guo Yu told The Irrawaddy.

“This is particularly pertinent as NGOs as well as foreign governments actively monitor foreign investor activity in the country and are most likely to publicly raise any concerns about their business practices,” said Guo, from business risk assessors Maplecroft in Britain.

Maplecroft last week wrote a report on the reputational risks still facing well-known foreign companies doing business in Burma.

“Although foreign companies are permitted to own deep-water blocks, onshore and offshore upstream production is still required to be shared with local firms, predominantly the state-owned Myanma Oil and Gas Enterprise (MOGE). The commercial operations of these large [state-owned enterprises] lack transparency, which fosters corruption, nepotism and cronyism,” Guo told The Irrawaddy.

Another US-based human rights NGO, Earthrights International, has exposed the foreign business links in the ownership and operation of the major oil and natural gas pipelines being built through Burma from the coast into southwest China.

The pipelines have been largely constructed by the Chinese state oil company China National Petroleum Corporation. Ownership of the oil line is shared between CNPC and MOGE, but Earthrights has shown that the gas pipeline is a partnership involving South Korean and Indian firms as well.

Daewoo International holds a 25 percent stake in the gas pipeline, with smaller shares held by Kogas, another Korean company, plus India’s state-owned ONG Videsh and GAIL.

Most foreign news reports make no mention of their commercial involvement in a pipeline that NGOs allege has led to numerous human rights abuses across Burma, including land theft, loss of homes and in some cases forced labor.

“This is important because by leaving out the Korean and India companies, they are in effect absolved of responsibility for the onshore gas pipelines impacts,” Earthrights’ campaign director Paul Donowitz told The Irrawaddy.

Daewoo International have acknowledged their participation and said they were in contact with CNPC about “complaints of negative impacts,” Donowitz said.

Winners of the bidding for the 30 offshore oil and gas blocks being offered by the Ministry of Energy are due to be announced in June.