Why the NLD government needs to renegotiate the Salween dams

Julian Kirchherr and Matthew J Walton urge a shift of focus to other dams in Myanmar.

In July 1997, almost exactly twenty years ago, the heads of governments of both Thailand and Myanmar sat down to sign a Memorandum of Understanding (MoU) with far-reaching implications for Myanmar. This MoU outlined the construction of seven dams to be built on the Salween River. These projects were supposed to feature a total capacity of 22,000 MW – 55% of Myanmar’s total hydroelectric potential and almost five times the total capacity installed today.

These days, many in Myanmar are awaiting a decision by the NLD government on the Myitsone dam. However, the Salween dams deserve just as much attention. Most are ‘battery dams’ – dams with significant electricity exports abroad, 4 with exports to Thailand, 2 to China. For instance, 90% of the electricity of the Mong Ton dam would be exported to Thailand. This project would thus send more hydropower across national borders than any other in Southeast Asia.

Electricity exports can generate significant revenues for a government. Bhutan generates 40% of its total governmental revenues from the sale of hydroelectric power to India. These revenues, in turn, can be used to accelerate a country’s development, e. g. via investing in the country’s roads, schools or healthcare system. However, contracts that govern the export of electricity need to be carefully negotiated to ensure that the projects are beneficial for the country the dams are built in and for the populations most affected by the dams.

The information available regarding the Salween dams suggests that this is an unfair deal for Myanmar and its people. For instance, Myanmar’s government would receive electricity worth USD 207 million from the Mong Ton dam annually, according to a study from Harvard University. However, it could obtain up to four times more if contractual terms matched those of comparable projects in Nepal and Laos. The people of Myanmar are being ripped off by the Mong Ton dam project.

So far, little information has been released regarding the contractual agreements of the Salween dams beyond the Mong Ton dam, although the NLD government promised that it would be transparent. Confidential interviews with decision-makers in Myanmar’s Ministry of Electric Power (MoEP) suggest that the contractual benefits of these remaining projects are also meagre. The renegotiation of these contracts is thus necessary.

Once renegotiation of the Salween dam contracts has started, not only policy-makers from Nay Pyi Taw, but also representatives from the affected local populations need a seat at the table. The existing contracts largely ignore them. These will help ensure that project-affected communities are the project’s first beneficiaries and that the largest share of benefits from these projects goes to affected local communities instead of the national government. This would be fair since these projects harm their territory and livelihoods.

Benefits shared must include not only financial benefits, but also significant amounts of electricity. In addition, the renegotiated contracts need to make clear that Myanmar will only export electricity abroad if its domestic demand is fully met. While the electricity of the Salween dams will not be needed in Myanmar immediately (or even 6-8 years from now – this is how long the construction of many of these dams will take), this may change in 15 or 20 years if Myanmar’s economy continues to grow at its current pace.

The Salween dams are what we call ‘Damocles projects’. This term reflects the constant threat that hangs over the villagers in the communities close to the Salween dams: the fear of resettlement. Our research elsewhere has shown that such ‘Damocles projects’ create tangible negative impacts on communities, even before a dam begins construction. For instance, communities invest much less due to this fear of being resettled soon, while stress levels are particularly high as vigilance and advocacy work can consume people’s time and resources. Planners must agree to reimburse communities for any negative planning phase impacts that occur as part of the renegotiation.

Within the renegotiation process, thorough environmental and social impact assessments must be carried out for each of the seven Salween dams. Moreover, a Strategic Environmental Assessment that considers these projects’ impacts from a river basin perspective is sorely needed. Several of the projects may have to be scrapped based on the results of these assessments if it becomes clear that their environmental, social and cultural impacts are too grave. Policy-makers must seriously consider the perspectives of affected communities, including valid concerns that massive hydropower projects will exacerbate existing conflict in Myanmar, rather than assuage it.

Admittedly, the suggested renegotiation will take time. But this time investment is needed to ensure that the people of Myanmar get a fair deal out of these projects. Projects pursued on the Salween river must not only attract investors and please Myanmar’s neighbouring countries. Instead, these projects must, first and foremost, benefit the people of Myanmar.

Contracts are oftentimes renegotiated when circumstances change, and circumstances have changed significantly in Myanmar over the past 20 years. Developing Myanmar’s vast hydropower resources can be an opportunity for the country’s growth. However, this opportunity is currently not effectively captured via the Salween dams. A renegotiation of these projects is overdue and the 20th birthday of these projects may be an ideal point in time to start it.

 

This commentary, which was originally published in Frontier Myanmar, is by Julian Kirchherr, assistant professor for sustainable business and innovation studies at the Faculty of Geosciences, Utrecht University, the Netherlands, and Matthew J. Walton, Aung San Suu Kyi Senior Research Fellow at the University of Oxford, United Kingdom. It is largely based on a recent academic study on the various dam projects pursued on the Salween River. This study can be accessed here. A free-of-charge pre-print version of the study is available here.