The Chinese government last month inked a deal with the Burmese junta to loan an additional $US2.4 billion to the generals, aimed largely at speeding up construction of the Shwe gas pipeline.
The deal was signed on the 30 November in Burma’s secretive capital of Naypyidaw, with few details provided, the Myanmar Times reported.
Chinese embassy official, Jin Honggen, told the newspaper that, “The loan will be mainly for the natural gas project in Kyauk Phyu, which involves Myanmar [Burma], China, Korea and India, where Myanmar has 7.3 percent of the shares. Part of the loan is provided for Myanmar as an investment in the project.”
The deal was signed by the Myanmar Foreign Investment bank and the China Development Bank Corporation (CDBC). The pipeline will transport Burmese gas and Middle Eastern and African oil offloaded in the Bay of Bengal to China’s southern Yunnan province.
The Kyauk Phyu area in coastal Arakan State was one of the worst-hit by the recent cyclone Giri, which destroyed an estimated 60 percent of the town’s buildings, although access to the area and information was heavily controlled.
Whether the damage necessitated the renewed investment is not known. Wong Aung of the Shwe Gas Movement (SGM) campaigning group believes that the investment may have been made available because of Chinese concerns over the competence of the Burmese authorities in managing such an important strategic infrastructure project.
He adds that the pipeline will also be key for the junta’s grip on power – the Shwe project is set to net the ruling junta $US30 billion over the next three decades, and will act as a key economic crutch for the regime.
Natural gas is believed to be Burma’s most lucrative export, worth some $US2.5 billion a year, but this figure could double when the pipeline comes online. Jin told the Myanmar Times that, “The natural gas from Myanmar will be used for Yunnan province’s industrial requirements and for residential use”.
The large quantities of gas that are exported to China and other neighbouring countries, such as Thailand, are a cause of considerable frustration to many Burmese who suffer persistent electricity blackouts.
The junta has also been accused of misappropriating the gas revenues by accounting for them in the public purse at the official exchange rate of around seven kyat to the US dollar, when in actual fact the gas is sold at closer to 1000 kyat to the US dollar, a more realistic figure. Rights groups have claimed the proceeds are then stashed in Singaporean bank accounts. Australia-based Burmese economics expert Sean Turnell says this leads to an artificial deficit when the country could have a trade surplus.