China Eximbank provides export seller's credit to YMEC for 140MW Upper Paunglaung Hydroelectric Power Plant Construction Project

Project narrative

In 2002, Hydroelectric Power Department (HPD) of Myanmar’s Ministry of Electric Power and Kansai Co of Japan conducted a preliminary survey report for the 140MW Upper Paunglaung Hydroelectric Power Plant Construction Project. Then, in 2004, the Switzerland-based Colenco Power Engineering Ltd completed a project feasibility study. On June 3, 2005, HPD and Yunnan Machinery and Equipment Import and Export Corporation (YMEC) signed an MOU regarding the 140MW Upper Paunglaung Hydroelectric Power Plant Construction Project. Then, on February 14, 2006, HPD and YMEC signed an $80 million commercial contract for the project. YMEC also reported provided a supplier credit to HPD to support the implementation of the project, and YMEC in turn financed the supplier credit by securing an export seller’s credit from China Eximbank. The purpose of the project was to construct a 140MW hydroelectric power plant — with two, 70MW power generation units (Unit 1 and Unit 2) — on Paunglaung Creek. The project site is located 26 miles east of Pyinmana in Mandalay Division (exact locational coordinates: 19.756000, 96.598000) and 24 km upstream from the Paunglaung Dam (captured via Record ID#63813). The project involved the construction of a 98 meter high RCC dam and a reservoir that stores 1,286 hm3 and extending 50 km. The reservoir was designed to allow the river to be regulated and thereby improve power generation at Lower Paung Laung and increase the irrigation potential further downstream. An above ground power plant is connected to the Lower Paung Laung switchyard via the Nancho hydropower plant by a 27 km long (to Nancho) 230 kV transmission line. YMEC was the contractor responsible for implementation. Construction began in 2006 and a test run of the spillway was conducted in 2008. The rotor of Unit 1 was hoisted into place on December 2, 2013. The rotor of Unit 2 was hoisted into place on February 22, 2014. A project completion ceremony took place on December 9, 2015. The power plant connected to the national grid on or around December 24, 2015. This project was plagued by controversy. One report from the civil society group Kayan Women’s Union alleged that the project supported involved forced labor and forced displacement. Another report from Physicians for Human Rights (PHR), Land in Our Hands, and Kayan New Generation Youth documented various human rights violations. The Myanmar Times found that more than 10,000 people from 23 villages were evicted after April 2013 to make place for the large dam. Among the affected groups were ethnic Kayan Lahta, Shan, Burman, and Pa-O. Most were moved to a relocation site near the Lein Li bridge, close to the middle of the reservoir. Residents were not well informed about the displacement process. They first learned about the project when officials came to place markers in their village to assess the water line for the reservoir, some villagers said. Many residents only realized that they would be displaced once construction work had started. While the government assisted the relocation through the provision of new housing infrastructure and farmland, villagers and civil society groups were deeply concerned about related livelihood losses, provoked by the drowning of traditionally used farming, fishing and forest areas. The relocation sites were hilly and lacked enough fertile plain to offer sufficient land to everybody. In addition, relocation sites have very poor living conditions with hunger and poverty being rampant. Compensation procedures were reported as irregular, corrupt and not transparent. In several cases, the payments were insufficient to cover the costs imposed by the relocation on the villagers.