Burma’s Natural Resources Sector Ranked Least Transparent in Global Study

By Seamus Martov 16 May 2013

A just-released study examining transparency in the global natural resources sector has found that Burma holds the worst record for disclosure and accountability out of 58 nations examined.

The survey, conducted by the Revenue Watch Institute (RWI), ranked Burma’s transparency levels lower than Turkmenistan, Equatorial Guinea and Zimbabwe, all of which are infamous for their blatantly corrupt extractive sectors.

RWI’s study looked at a list of indicators including the level of information that governments share with the general public about natural resource projects, from the amount of revenues raised to the process by which projects are approved and regulated. Burma consistently ranked at the very bottom of every criterion measured and received an overall failing grade in every category.

RWI is a nonprofit policy institute headquartered in the United States with offices in Africa and Europe. Its aim is to promote “the effective, transparent and accountable management of oil, gas and mineral resources for the public good.”

RWI attributed Burma’s poor showing on the annual index to the government’s consistent refusal to disclose even basic information about large scale resources projects, and a failure to follow international standards and guidelines.

According to RWI, in Burma “almost no information is available on the management of the extractive sector. Myanmar has no freedom of information law, and environmental and social impact assessments are not required.”

At present, billions of dollars in revenue are flowing into Burmese government coffers from the Yadana and Yetagun natural gas pipelines, which send gas to Thailand. According to the study, however, “It is unclear which authority receives payments from extractive companies. It is widely assumed that corruption is rampant in the sector.”

Burma’s government has acknowledged that from 2006 to present it received more than US$19 billion from the sale of natural gas to Thailand. How this money was spent and where it ended up remains shrouded in mystery.

In 2009, the US-based legal rights NGO, EarthRights International (ERI), accused the Singapore-based Oversea-Chinese Banking Corporation (OCBC) of assisting Gen Than Shwe’s military regime in hiding the billions of dollars in revenue it received from the lucrative Yadana pipeline, which continues to be operated by France’s Total, the US firm Chevron and Thailand’s state-owned oil firm.

While President Thein Sein’s government has embarked on a series of reforms since coming to power two years ago, the poor showing on the RWI index supports activists’ claims that corruption remains widespread in Burma’s lucrative energy sector. At a press conference in the northern Thai city of Chiang Mai on Thursday, Wong Aung of the Shwe Gas Movement called the current level of governance and accountability in Burma’s natural resources sector “completely unacceptable.”

Wong Aung, whose advocacy organization provided some research for the RWI report, said his group is very concerned with what the government will do with the vast revenues it will receive from the Shwe oil and gas pipeline project, which will send fuel from Burma’s Arakan State coast to China’s Yunnan province.

The controversial project, led by China’s state-owned China National Petroleum Corporation (CNPC) with partners including South Korea’s Daewoo and a Burmese state-owned firm, is supposed to be ready soon. The project, which will cost more $3 billion, has been marked by a lack of disclosure and transparency from the very beginning, Wong Aung said.

“The projects are backed by military cronies so when we try to push for disclosure of revenue information we face a very hard time,” Wong Aung explained.

The recent lifting of most Western sanctions against Burma over the past 12 months has created a situation where there is a great deal of interest from foreign firms seeking to invest in Burma. According to Wong Aung, however, little has actually changed under President Thein Sein’s nominally civilian government with regard to the way it handles accountability issues in the natural resource sector.

“There are still a lot of problems with mining as well as oil and gas projects in different parts of the country that affect local people who are losing their livelihoods,” he said.

While Burma’s nominally civilian government has indicated a willingness to commit itself to the Extractive Industries Transparency Initiative (EITI)—a voluntary framework that sets minimum standards on financial disclosure for nations that sign on—doubts remain as to whether Burma will actually follow through.

Paul Donowitz, campaign director for ERI, a group that has focused on Burma’s extractive sector for more than 15 years, believes significant policy changes need to be made by the government before Burma achieves a level of disclosure consistent with the EITI.

Donowitz wants Myanmar Oil and Gas Enterprise (MOGE), the state-owned entity that oversees much of Burma’s energy sector, to change the way it operates in accordance with international standards. “Some of the things that MOGE could do immediately, for example, would be around disclosure. They could require in the new contracts, any company that wants to bid has to agree to disclose payments, contracts, assessments.”

Whether Burma’s government chooses to implement policies that promote transparency remains to be seen. Critics point out that such change is possible. Brazil, a resource-rich nation that was also once run by generals, has scored very well on recent RWI surveys, largely because of transparency rules implemented over the last decade.