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Myanmar Falls Behind in Renewable Energy

While many developed economies are making the switch to using alternative sources for energy supply, Myanmar still regards the country’s natural resource reserves as an inexhaustible pool and increasingly exploits them in its path for development. However, the government finds itself caught between the foreign investment flooding into resource-based sectors and a population becoming more conscious about environmental and social impacts of such projects. There is also growing discontent about the lesser share of benefits Myanmar will gain from those multinational projects.

This can be seen in many cases, such as the Myitsone Dam project, in which the government defied Chinese influence and yielded to public demand, or the controversial Letpadaung copper mine where the government is forcibly supporting the investments of China’s Wanbao mining company.

Although President U Thein Sein suspended the Myitsone dam project under the pressure of the public after awareness grew of the wide impacts of foreign-funded resource extraction projects, talks to continue the project are likely to resurface after the end of the current government’s term. Conservation activists are preparing to update their assessments on the impact of the dams.

Myanmar’s small electricity production capacity of 4,362 megawatts, combined with the electricity requirement for potential foreign investment in the manufacturing sector is driving the government to develop large scale electricity-generating projects in a short time frame. The government’s proposals at the parliament to build coal-fired power plants are likely to fail to garner public support because of the high-polluting nature of the coal-fired generators.

The question is why the government does not consider using alternative sources for energy such as wind turbines or solar panels, which have much fewer negative impacts to the environment. In China and the US, which consume the most energy in the world, wind energy accounts for 43 percent and 31 percent respectively of new generating capacity installed in the past five years. Due to foreign investment pressure, though, sustainable solutions are too slow to implement and costly to set up.

Instead of learning from successful international practices the government is pushing the environmentally costly coal-based generating plants, such as the one planned in Tharpaung. This will inevitably bring strong opposition from civil society groups. Likewise, putting the interest of a foreign company above public opinion as in the case of Letpadaung will only lead to tension and deadlock.

Citing the need to expand the electricity supply coverage, which currently serves about 30 percent of the population, the government has set a target of increasing coal-based generating capacity tenfold and to build 16 new coal-fired power plants, raising the concerns of the civil society and conservation groups. Meanwhile, only around 18 percent of the natural gas produced in the country is consumed locally, with the rest being exported, mainly to Thailand. This highlights the large share of natural resources in the overall exports.

Geologists have suggested the government restrict the significant amount of mining concessions and raw gem exports. Although the country is rich in gems and mineral resources, the lack of effective resource management hurts the development of processing and value-added operations in the sector. Conservation groups are calling for better regulation to ensure socio-economic development as well as to minimise the environmental impacts from the extractive projects.

Regardless of the way the government has handled the resource extraction sector in the past, the country has been included as a candidate country in the EITI (Extractive Industries Transparency Initiative). This will galvanise more concern in the management of the sector. The EITI report due by January 2016 is expected to reveal the agreements reached between the government and extractive firms including tax-related issues.

The EITI report will focus on the oil and gas sector while mining and forestry sectors are also being observed to be included in the report, according to the EITI implementing Multi-Stakeholders Group. The future concessions will be required to apply EITI standards so more respectable firms that follow international standards to avoid social and environmental impacts are expected to come into the country. Meanwhile the EITI report needs to provide options to handle the illegal logging, mining and smuggling of natural resources.

After the government ban on raw timber log exports in April last year, forest-based product exports have decreased and the Ministry of Environmental Conservation and Forestry has also paid more attention to conservation activities than timber productions.

The industrial sector is also attracting a great deal of investment and the government should make the right decisions and incentives to transform the resource-dependent economy to one based on labour-intensive manufacturing and technology.

If Myanmar is to use its resource wealth properly, the government needs to encourage more wind and solar investment, keep more of its resources inside the country, and resist the temptation to speed up infrastructure for short-term gains.

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