China may scrap divisive dam in Myanmar to advance other interests-sources

China may scrap divisive dam in Myanmar to advance other interests-sources

China has shifted its position in a lengthy dispute with Myanmar over the
building of a $3.6 billion dam, seven sources said, signalling its
willingness to abandon the project in exchange for other economic and
strategic opportunities in Myanmar.

Myanmar President Htin Kyaw will discuss a potential deal on the massive
Myitsone dam during a trip to China beginning on Thursday, two senior
Myanmar officials and a person familiar with the matter told Reuters.

Until recently, China had been pushing hard for the 6,000 megawatt project
to go ahead despite widespread opposition within Myanmar which forced the
suspension of work in 2011.

Now, it is discussing alternative options with Myanmar including developing
a number of smaller hydropower projects and securing preferential access to
a strategically important port to compensate it for shelving the project,
the sources said.

The seven sources include senior Myanmar government officials, a person
familiar with the original deal and a person close to the Chinese
state-owned operator of the dam. They declined to be named due to the
sensitivity of the matter.

Executives at the developer, the Sino-Myanmar joint venture Upstream
Ayeyawady Confluence Basin Hydropower, are "deeply concerned" the project
will get scrapped, according to a person close to the company.

In a statement, the company said it was looking forward to "an impartial and
fair" review by the Myanmar government into the environmental and social
impact of the project. It said it remained confident of an appropriate
solution, without giving details.

Myanmar's national security advisor Thaung Tun said the review, led by Htin
Kyaw, was in its final stages.

The person familiar with the original deal said the Chinese-owned operator
of the dam, the State Power Investment Corp Yunnan International Power
Investment (SPICYN) has not been actively pursuing the project over the last
six months, in contrast to its more proactive stance previously.

SPICYN declined to comment.

LESS POWER NEEDED

China would maintain communications with Myanmar to handle "any difficulties
encountered in the course of cooperation on the project" Hua Chunying, a
spokeswoman for China's Ministry of Foreign Affairs, told a regular media
briefing.

The Myitsone dam was supposed to send 90 percent of its electricity to
China's neighbouring Yunnan province, angering many in electricity-starved
Myanmar.

But in recent months, China's appetite for the project has diminished
because Yunnan now has an oversupply of electricity as it switches to less
energy-intensive industries amid an economic slowdown, sources said.

Instead, China, with its "One Belt, One Road" ambitions of improving links
with central Asia and Europe, "wants a face-saving solution" that would
allow it to advance its other economic interests if it shelves Myitsone,
said a top government official familiar with discussions.

A deal would mark a geopolitical shift away from the West, as Naypyitaw
looks to improve ties with China at a time when the United States and the
European Union are focussed more on domestic policies.

Beijing is an increasingly important partner for Myanmar leader Aung San Suu
Kyi, who has made ending decades of ethnic war her top priority. Myanmar
needs Chinese support to stabilise their shared border amid increased
fighting with armed ethnic groups.

Myanmar is likely to be liable to China for compensation on hundreds of
millions of dollars already spent on the project, according to the source
close to the deal and a person familiar with the government's position.

Myitsone's developer and operator did not comment on potential compensation
arrangements and it was not clear how that would be handled.

"The compensation doesn't have to be cash," said one of the officials
familiar with Suu Kyi's thinking. "China is interested in other
infrastructure projects including smaller-scale dams."

China is also pushing for preferential access to the deep sea port of Kyauk
Pyu on the Bay of Bengal, according to two sources familiar with the
government's position.

Kyauk Pyu is the entry point for a Chinese oil and gas pipeline and the two
countries are close to starting pumping oil through it. The pipeline will
provide China an alternative route for receiving Middle Eastern oil.

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Link to Original Article:
http://energy.economictimes.indiatimes.com/news/power/china-may-scrap-divisi
ve-dam-in-myanmar-to-advance-other-interests-sources/58040092

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com