Hydropower threatens peace in Myanmar -- but it doesn't have to

Hydropower threatens peace in Myanmar -- but it doesn't have to

Myanmar faces a critical moment for investment decision-making. The Barack
Obama administration's move to lift sanctions on the Southeast Asian country
has opened up new opportunities. But the moves that are made today will send
political and economic ripples into the future, and the international
community must act responsibly.

China wants to finance a 3,600-megawatt hydropower dam called Myitsone --
one of the largest in Southeast Asia -- with the goal of directing most of
the power back to China. This project, however, could compromise peace
negotiations between rebel forces in the northern state of Kachin and the
Myanmar government.

Construction of the dam stalled in 2011 and presents a critical test for
Aung San Suu Kyi's governing National League for Democracy party.

Villagers in Kachin have expressed extreme opposition to the megaproject,
which raises severe environmental concerns and threatens livelihoods. The
issue is particularly complex due to geopolitical factors: lucrative
financing from China, pressure to improve human rights from the U.S. and
international community, and free trade deals with the Association of
Southeast Asian Nations.

Proceeding with the dam would diminish the authority of Myanmar to stand up
to China and would exacerbate ethnic tensions that already run high between
local communities and the national Myanmar government. Past promises from
Chinese companies to share the benefits of hydropower development have only
displaced villagers and destroyed local livelihoods in Myanmar. This case is
no different. A resolute stance against Myitsone could empower local
communities -- and such empowerment remains critical to developing peace and
stability.

Engagement with key stakeholders is necessary for a sustainable and peaceful
21st-century power system that works for the people.

National electrification

Currently, hydropower planning is a source of conflict, with local villagers
excluded from the decision-making process. With the right approach, though,
this could become an opportunity to build peace and supply sustainable
energy to local communities.

First, a sincere and open dialogue that engages key local stakeholders is
necessary for reconciliation and building trust. Secondly, thorough
environmental impact assessments with the involvement of local stakeholders
would go a long way to improving transparency. Finally, the international
community has the power and responsibility to support Myanmar with technical
assistance and state-of-the-art science, encouraging bottom-up, small-scale
hydropower and distributed renewable energy development.

Electricity access initiatives led by multilateral development banks call
for an aggressive push toward 100% electrification by 2030. Currently, only
around 35% of Myanmar has access to power, which in many cases does not meet
the needs of citizens. The 100% target could be achieved in a cost-effective
manner with local resources, including the solar- and small-hydro-based
mini-grids that are rapidly emerging across the country.

For the past three years, in collaboration with Chulalongkorn University, we
have held a series of stakeholder meetings in Bangkok with current and
potential investors regarding the prospects for independent power producers,
or IPPs, throughout Myanmar. These workshops have shed light on the IPP
predicament facing the country and its neighbors. The "free power and free
share" model -- under which Myanmar is entitled to free electricity and
stakes in such projects -- fails to deliver prosperity, as fair mechanisms
for allocating the benefits are not institutionalized. Often, local
communities do not receive electricity and lose out on alternative
investments in energy resources that require less transmission and
distribution infrastructure.

Banks play a key role in driving such agreements. Until now, IPPs have tried
to maximize exports to neighboring countries and minimize financial risk in
emerging markets like Myanmar. The lack of credibility among Myanmar's power
utilities enables neighboring countries to take advantage of lax regulations
and opportunities for lucrative investment at the expense of local
villagers. As the Myanmar government often cannot grant concessions to
cross-border IPPs due to a high risk of credit default, the benefits remain
unrealized in many cases.

Most of the hydropower development proposals in the Salween river basin
during the last decade have not been built. A few large-scale cross-border
IPPs currently operate in tributaries of the Irrawaddy River, including
Shweli1, which has installed capacity of 600MW, and Dapein1, which has
240MW. While the electricity generated there is mainly exported to China,
the IPP agreement grants 10-15% of total project generation and
shareholdings for free to Myanmar.

The conventional wisdom is that "free power, free share" remains a
prerequisite for concessions by Myanmar. But this concept is inherently
flawed.

For example, our field survey in Shweli1 makes it clear that 15% of
generated power is provided for free to the state-owned mining company and
military camp, while neighboring towns must purchase electricity at 4-8
cents per kilowatt-hour and villages must re-import electricity from China
at 20 cents per kilowatt-hour. These tariffs are higher than tariffs on the
grid.

To make things worse, the "free" benefits in Myanmar fuel conflict by
compounding inequality among civilian groups. One example of this is the
Mong Ton dam in Shan State, promoted by the previous military government.
Nongovernmental conservation groups held an anti-dam campaign "to urge the
government as well as Chinese and Thai investors to immediately stop plans
to build dams, as this is causing conflict and directly undermining the
peace process," as Burma Rivers Network put it. Salween Watch, a civil
society watchdog, sees the construction of dams as "one of the strategies
used by the military regime to gain foreign support and funding for its
ongoing war effort" while viewing dams as "a strategy to increase and
maintain its control over areas of ethnic land after many decades of brutal
conflict."

With the democratically elected NLD government having taken power in 2015,
Myanmar has an opportunity to escape past nightmares and begin to distribute
benefits equitably. Certainly, monetary compensation and free power seems
appealing to local communities in need of electrification and economic
development. However, as the NLD rightly states, it is much more critical to
secure livelihoods and the environment by pursuing sustainable development
practices.

Villagers depend on income from natural resources, including forest and
fisheries products. Our field survey regarding the Mong Ton hydropower
development shows that local villagers cite deforestation, river flows and
flood damage as their top dam-related concerns. Investigations into the
effects of dam construction are critical undertakings that must become part
of the hydropower decision-making and planning process. Without them, there
can be no trust, and a strong local backlash against the influential,
military-tied Ministry of Interior is inevitable.

Start with science

In the past, Myanmar's government glorified dams while environmental groups
vilified them. Neither stance was grounded in rigorous scientific
evaluations, and each side's argument fed the other's distrust -- creating
resentment and hampering dialogue.

To move forward, we recommend establishing regulations on environmental
impact assessments that include public disclosures. Building reliable
institutions to enforce such rules poses a challenge, but doing so could
help to bridge the gap between groups and restore trust -- something that
has been lost in Kachin and Shan states since 2011, as recent flare-ups in
violence demonstrate.

The timing is urgent. The peace process remains on the cusp of an agreement.
Rural electrification efforts are underway, but we know that distributed
mini-grids from local solar and hydropower resources can be built and
deployed faster than megaprojects, supporting peace efforts. The opportunity
cost of inaction is high. Continuing the Myitsone project as a concession to
China, meanwhile, could undo half a decade of peace negotiations and further
damage the environment while negatively impacting villagers and their
livelihoods.

In short, increased transparency and local engagement could usher Myanmar
toward peace and prosperity. At the same time, it is up to the international
community to expand the country's intellectual and institutional capacity.
We can support Myanmar's infrastructure development not only through hard
and soft loans, but also with technical assistance.

Myanmar needs environment- and people-friendly hydropower planning. Only
then will the projects support peace-building rather than conflict.

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Link to Original Article:
http://asia.nikkei.com/Viewpoints/Noah-Kittner-and-Kensuke-Yamaguchi/Hydropo
wer-threatens-peace-in-Myanmar-but-it-doesn-t-have-to

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com