Burma's intriguing power game beckons clean biz investors

Friday, January 13th, 2012
By: 
Gerry O'Kane
Balloons of Pagan

There is an intriguing fight developing between clean and renewable business and non-green industries in Burma. In a very public announcement – to reporters in Rangoon – the minister for electricity Khin Maung Soe halted the construction of a Thai-backed coal-fired power station.

It comes only months after the Chinese-funded Myitsone hydroelectric dam was halted after listening to “the people”.  This time he said the coal-fired plant at Dawei had raised pollution and environmental concerns. According to the BBC he said the project was stopped after "listening to the people's voice and reading the concerns about the environmental impact of this plant in local media reports".

It is another big volte-face by the administration of President Thein Sein. Like China, Burma's Thai neighbours had been busy investing when Burma was regarded as an international pariah, especially in exploiting mining and power generating opportunities.

Times are a-changing and since the military junta handed power to a nominally-civilian government last March, the increasing pace of reforms has resulted in visits to the country by Hillary Clinton in November while only days ago Britain's foreign secretary, William Hague, applauded his visit to Rangoon. And they have been followed by investors.

The cancelled 4-GW coal plant was a critical part of a huge industrial development in Dawei on Burma's southern coastline. Thailand's largest construction firm, the Italian-Thai Development Company (ITD), was granted concessions by the Burmese government in 2010.

These concessions were valued at USD58 billion in developing a deep-sea port, shipbuilding, an oil refinery, petrochemicals, steel-making and fertilizer plants along a pristine coastal area. The project includes rail, road and pipeline links to Thailand and China.

There are several politically-motivated reasons for the decisions of the Burmese government. It could be the authorities are genuinely concerned not to upset the citizens. It could be that Burma sees the potential of green industries, while exploiting other natural resources. On the other hand, as international rapprochement develops, it might be rethinking past policies, while having the benefits of seeking better contractual returns on planned projects, also with an eye to the future.

It may be coincidence, but when Aung San Suu Kyi addressed the Annual Meeting of the World Economic Forum in Davos she said, “[Burma] ... need[s] investments in technology and infrastructure. We need to counter and eventually eradicate widespread poverty by offering opportunities that will allow the entrepreneurial spirit of our people to be gainfully harnessed through micro lending programs... At the same time, we also need to pay close attention to the costs and collateral damage of our development, whether environmental or social.”

Nevertheless other deals – renewable energy deals – are going ahead. December saw a report filed with the Stock Exchange of Thailand confirming that Gunkul Engineering is undertaking a feasibility study on the development of wind-power plants in Burma.

According to reports the possible project cost could be USD2 billion with a 30-year concession term divided into five phases with a 200-MW capacity each. Both the Electricity Generating Authority of Thailand and the Provincial Electricity Authority are interested in participating.

But the fact remains that decades of isolation and western sanctions in response to a military junta, left Burma poor and any development came from within Asia, primarily China and Thailand. Now it is attracting wider interest with trade delegations from Germany, Britain and the US have all ventured to meetings in Rangoon. While sanctions have yet to be dropped, there is increasing pressure for their easing.

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