Myitsone Project benefits both China and Myanmar

On September 30, some media reported that the Myanmar government will suspend the construction of Myitsone Hydropower Project in upstream Ayeyawady River, which caused extensive attention from media both home and abroad. For this, Lu Qizhou, President of China Power Investment Corporation, was interviewed by the Chinese media on Monday.

Myitsone Hydropower Project in upstream Ayeyawady River

Q: President Lu, lately we noticed in the media that the Myanmar government will suspend the on-going Myitsone Hydropower Project. As China Power Investment Corporation (CPI) is the main investor of this project, can you tell the public what really happened?

A: I also learnt about this through the media and I was totally astonished. Before this, the Myanmar side never communicated with us in any way about the "suspension". Ever since CPI and Myanmar Ministry of Electric Power No. 1 "MOEP (1)" signed the MOU in December 2006, CPI has always followed the principle of mutual respect, mutual benefit and win-win result and established a Joint Venture with the Myanmar side, strictly observed the Chinese and Myanmar laws and regulations, diligently fulfilled our duties and obligations, and proceeded according to the operation mode of international BOT project. In March 2009, the Chinese and Myanmar governments signed the Framework Agreement on Joint Development of Hydropower Resources in Myanmar, explicitly supporting CPI in developing the upstream-Ayeyawady hydropower project.

We hired topnotch hydropower design institutes, research institutes, consultancies and authoritative experts in China to carry out planning, design, specific study, consultation and supervision for the upstream-Ayeyawady hydropower project. Changjiang Institute of Survey, Planning, Design and Research is responsible for the planning of upstream-Ayeyawady basin and the design of Myitsone Hydropower Project. It is also the institute that designed China's Three Georges Project. When we proceeded with Myitsone Hydropower Project, technical documents were consulted and reviewed by authoritative organizations and experts, and passed review organized by MOEP (1). Therefore, all legal documents, including the application for approval, signing of Joint Venture agreement, business license of the Joint Venture, investment permit, concession rights and legal opinion of the Judge are all in strict compliance with procedures of Myanmar. So far, all legal supporting documents for Myitsone Hydropower Station are complete for both countries. This is to say that the upstream-Ayeyawady hydropower project including Myitsone Hydropower Station, for which CPI is responsible for development and construction, is a major project approved by Myanmar government and has strictly performed all legal procedures in China and Myanmar. In February this year, Myanmar's Prime Minister urged us to accelerate the construction when he inspected the project site, so the sudden proposal of suspension now is very bewildering. If suspension means construction halt, then it will lead to a series of legal issues.

Q: How did CPI participate in the construction and development of Myitsone Hydropower Station in the first place? What's the status quo of the project? If the project is suspended, what impacts will be caused?

A: Hydropower is the technologically most proven and most economic renewable energy today. The average development of hydropower in developed countries is already above 60 percent, 72 percent in America, 67 percent in Japan, 90 percent in France, 95 percent in Italy and over 60 percent in Norway. Hydropower development rate reaches 50 percent in China now, and is planned to reach about 75 percent in 2020. With a total hydropower resource of over 100GW, Myanmar is one of the few countries in the world that have abundant hydropower resources, but the current rate of development and utilization is only 2.45 percent, which is in extreme disproportion to the resources it possesses. In particular, as the upstream-Ayeyawady hydropower project is located near the China-Myanmar border, developing hydropower resources here not only can meet Myanmar's power demand for industrialization, but also can provide clean energy for China. It is based on this consideration that we decided to invest in this mutually beneficial and double winning hydropower project.

Myitsone Hydropower Station that people are concerned about is the largest station in the river basin and started construction in December 2009.Currently, resettlement in the dam area of Myitsone Hydropower Station has completed, site preparations (access road construction, water supply, electricity supply, communication and site leveling) have started on full scale, on-site facilities including access road, water treatment plant and oil warehouse have taken primary form, the cross-river bridge downstream of the dam is under construction, and excavation for the main spillway and diversion system has also begun.

Since the inauguration of the Myitsone Hydropower Project, huge sum of money has been invested. If the project were suspended, the loss would go far beyond direct investment and financial expenses. There would also be tremendous amount of default claims from contractors, serious inability of electricity generation of the Construction Power Plant, huge increase of basic investment spread to other cascade power stations, and so on. As a result, the goal of completing the upstream-Ayeyawady hydropower project in time will not be achieved, causing immeasurable losses to both China and Myanmar. At the beginning of this year, Myanmar and China reached an agreement and relevant banks of both countries signed a RMB loan agreement.To guarantee repayment, the Myanmar government has secured its shares in Myitsone Hydropower Station and taken its expectant revenues as the main source for loan repayment. If the construction of Myitsone Hydropower Station were suspended, that would seriously impact the implementation of loan agreement.

In my opinion, having undergone sufficient scientific proving and fulfilled stringent legal procedures of both countries, Myitsone Hydropower Station is sure to withstand the test of history. I strongly hope that with unremitting efforts of relevant parties, this project can smoothly move forward on schedule, and mutual benefit and win-win result will become a reality for China and Myanmar.