Nay Pyi Taw: In what may dampen New Delhi’s economic diplomacy initiative to engage Myanmar, the South-East Asian nation has scrapped two hydroelectric projects that were being planned with India’s assistance at Tamanthi and Shwezaye on the Chindwin river in Myanmar.
In a recent communication to the foreign ministry, Myanmar has said that since the social effects associated with the resettlement of people on account of these projects would be high, it didn’t want to pursue them, according to several people aware of the development.
Also, proposed tariffs from the projects were exorbitantly high, according to the Myanmar government. Indian state-owned power utility NHPC Ltd had prepared detailed project reports for the proposed 1,200 megawatts (MW) Tamanthi and the 880MW Shwezaye projects.
The foreign ministry has underwritten the Rs.40 crore NHPC had spent on the hydrological studies required to build the power plants. NHPC had taken up additional investigation into the proposed projects in Myanmar as a consulting assignment for the ministry of external affairs (MEA).
U Win Tun, Myanmar’s minister for environmental conservation and forestry, said his government doesn’t intend to go forward with the projects.
“In searching for development, we have to pay attention to the environment, which is our priority. In the past, we haven’t practised procedures such as environment impact assessment (EIA) study,” he said. “Our people have become aware of these measures. Today, we are focusing on people. Even if there are EIAs in place, if our people say no, we wouldn’t go forward. Our policies are people-centric.”
“The projects are getting dropped,” said an NHPC executive, requesting anonymity.
Myanmar has hydroelectric power potential of around 100,000 MW, of which around 39,720 MW has been identified for development. The country has an installed power generation capacity of 6,300 MW, of which hydro power generation capacity is 2,500 MW. It also has a low per capita electricity consumption of 100 units.
“All the concerned departments such as the ministry of power, Central Electricity Authority (CEA) and the ministry of external affairs are aware of their (Myanmar’s) stand,” said another NHPC executive, who also didn’t want to be identified. “The communication was from Myanmar’s department of electrical work.”
The Tamanthi and Shwezaye projects are located on the largest tributary of Irrawaddy, Myanmar’s key commercial waterway. The capital-intensive Tamanthi project was also meant to help control floods and provide water for irrigation in the region. India was to receive the bulk of the power generated.
These projects were also at the heart of the Indian government’s attempts to counter China’s influence in resource-rich Myanmar. Myanmar borders China and India, the world’s two fastest growing major economies, and has natural gas reserves of 89.72 trillion cubic ft (tcf), of which 18.01 tcf can be easily extracted and tapped.
“I want outside people to be intelligent about it. We want to be fair to all our neighbours. We want to be on good terms with all our neighbours if we have to engage with the whole of industry. The fact that it is resource doesn’t mean that there can be real friendship as well,” said Aung San Suu Kyi, Nobel laureate and chairman of the Myanmar opposition party National League for Democracy, referring to the large number of Indian and Chinese firms showing interest primarily in the country’s resource industry.
Of Myanmar’s overall trade of around $19 billion, China accounts for around $5 billion, and India $2 billion. Of this, exports account for $542.7 million and imports $1.4 billion.
A foreign ministry spokesperson declined comment.
“India and Myanmar have reviewed the detailed reports of the Tamanthi and Shwezaye hydro-electric projects prepared by NHPC. Taking into consideration the questions raised with regard to the economic viability of these projects and potential social and environmental impact, both sides have agreed to suspend any further action on them for the present,” said a person familiar with the development, requesting anonymity. “Both sides have also agreed that they would explore other opportunities for undertaking joint projects.”
The electricity tariff for Tamanthi works out to Rs.6.46 per unit, with the project cost estimated at Rs.17,270.69 crore. Tariff for the Shwezaye projects works out to Rs.11.06 per unit.
“They have communicated that this is an expensive project and they don’t want to go ahead,” said a third NHPC executive, also requesting anonymity. “They want no further work on this. These are expensive projects and the power at this tariff will not be feasible.”
NHPC, too, had termed the two Myanmar projects as unfeasible, Mint reported on 28 January. NHPC said the Tamanthi project was financially unviable without government support, and that the Shwezaye was technically unfeasible. It presented its report to the MEA, the Myanmar government and CEA, India’s apex power sector planning body.
India has stepped up engagement with its neighbour. This was reflected in Indian Prime Minister Manmohan Singh’s visit to Myanmar last year that marked the first visit by an Indian prime minister to the previously isolated state in a quarter of a century. India has also extended a $500 million credit line to Myanmar.
Elizabeth Roche in New Delhi contributed to this story.