Shwe Gas project sets ‘bad example’ for investment in Burma

Video: “The Source of Trouble” (courtesy of the Shwe Gas Movement)

The controversial China-backed Shwe Gas project sets a bad example for future investments in Burma’s extractive industries and should be suspended pending genuine regulatory reforms, a new report said on Monday.

The 43-page report, compiled by the Shwe Gas Movement (SGM), documents serious abuses linked to the junta-era project, including forced labour, land grabs, pollution and an exacerbation of ethnic conflicts.

Villagers living near the 800-kilometre pipeline, which cuts through western Arakan state and the conflict-torn northern Shan plateau en route to China, report an influx of rights abuses since construction began.

SGM says that boys as young as 14 have been recruited by foreign sub-contractors to work as bricklayers or road labourers, while adults – most of whom have been forced to abandon their traditional livelihoods – are routinely underpaid.

“A villager is hired at a rate of 6,000 kyat [US$6.25] per day at first, but in reality the villager is given only 2,000 kyat [US$2.08] per day,” a local worker told SGM. “If the villagers oppose and complain against [the contractor] about the wages, the villagers are fired from their jobs.”

Thousands of fisherman and farmers have lost their lands, either due to land grabs or environmental damage, often without adequate compensation.

“They are dumping waste in the field after working with the bulldozer,” a local man from Kyaukphyu complained in a letter to the township commissioner. “Now we cannot work in the field.”

Faults in the pipeline, which began pumping gas in late July, have already been reported. In mid-September a gas leak burst into flames and terrified residents in Arakan’s Ann township. It follows a report by the Northern Shan Farmers Committee in April, which included photographs of visible holes marking the pipeline.

“They fixed the holes in the pipeline with rubber patches, like fixing a tyre puncture,” said the report.

SGM says the Shwe Gas project will set a dangerous precedent for foreign investors who are flooding into the country, unless key regulatory concerns – including mechanisms for benefit sharing and political federalism – are addressed.

“The only way to avoid complicity in abuse and a future of inequality and displacement is to postpone this and similar projects until the fundamental problems of poor governance and the disenfranchisement of ethnic nationalities are solved,” warns the report.

Wong Aung, coordinator at SWG, described it as a “critical” time for Burma’s extractive sector. “Only when we have ensured equal benefits and humane conditions can development proceed without conflict,” he said.

SGM warned that Burma’s recent commitment to implement the Extractive Industries Transparency Initiative (EITI) – a global transparency standard for the natural resource sector – was likely to prematurely “green-light” fresh investments. It follows the auctioning off of 30 new oil and gas blocks earlier this year.

President Thein Sein has set a deadline for Burma to submit its EITI candidacy application by December, which critics have described as “arbitrary”. One of the key outstanding pieces of Burma’s application is the creation of a multi-stakeholder work group (MSG), which represents the country’s myriad civil society voices, and many activists say they need more time to prepare.

But Jeremy Weate, a senior consultant with Adam Smith International, who is advising Burma on its EITI process, told DVB that concerns about the MSG were “needless”. While he acknowledged that it would not be possible to have a “fully inclusive or participatory” discussion by December, he insisted that EITI should be viewed as an ongoing process with checks and balances along the way.

“If there is any attempt to limit membership of the civil society aspect of EITI, it simply means that that country is not ready to implement EITI,” he said, adding that Burma’s application would be rejected by the governing board.

He also warned against conflating financial transparency with debates around benefit sharing or constitutional federalism.

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“The EITI has to be very careful not to get sucked into anybody’s agenda. It should just be perceived as an independent source of very good information, which can feed into conversations [about federalism] but it should not be directly plugged into that,” said Weate. “It should be impartial.”

Burma, which is slowly emerging from decades of military rule, is rich in gems, industrial minerals, oil, and offshore natural gas reserves estimated at 10 trillion cubic feet. But most of the country’s natural resources are found in its volatile ethnic minority regions, including Shan and Kachin states where armed rebels and government troops continue to clash.

The country’s 2008 constitution largely excludes ethnic states from political decision-making on natural resource governance, a fact which has fuelled distrust and conflict between minority rebels and the central government. Earlier this year, Burma ranked last on a global study examining natural resource governance.

The Shwe Gas pipeline is a joint venture between the state-owned China National Petroleum Corporation (CNPC) and the military-owned Myanma Oil and Gas Enterprise (MOGE), and is expected to earn Burma US$1.8 billion annually – totaling US$54 billion over 30 years of operation. CNPC did not respond to DVB’s request for comment.

Last week, ten Arakanese men were sentenced to jail for staging a peaceful protest against the project, which campaigners have described as “unlawful and a clear violation of human rights”.

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