Environmental and social standards await final approval to move forward

A major issue surrounding project implementation in Myanmar is the way environmental and social impact assessment (EIA/SIA) reports are conducted. Without clear legislation, many investment projects struggle to complete this critical step.

The Environmental Conservation Law was enacted in March 2012 and its rules and regulations were made public in June last year.

Foreign investors are obliged to comply with this law. However, the local practice of completing EIA/SIA reports still needs improvement, and investors and regulators are trying to put together a standard procedure to guide the process.

“We are going to publish a standard EIA/SIA procedure soon, around June,” said U Kyaw San Naing, a director from the Environmental Conversation Department (ECD) under the Ministry of Environmental Conservation and Forestry (MOECAF).

The department has finalised a standard EIA/SIA procedure which has been sent to the cabinet and Attorney General’s Office for final approval. The procedure will offer clear instructions to companies on how to complete the reports.

“It is really important that these procedures are published. We need a solid legal base for companies to work from, and just one set of rules rather than different practices in different sectors and locations,” said Vicky Bowman, director of the Myanmar Centre for Responsible Business (MCRB).

The EIA/SIA regulations will cover a range of sectors, including real estate, infrastructure and electricity, but the extractive industries are most in need of clear guidelines.

At the moment, only a few mining projects are in operation, focusing on gold, jade and other mineral resources.

The sector will not thrive without a standard EIA/SIA procedure, because without a set of clear guidelines, companies are likely to run into controversies.

For example, the long-running conflict at Letpadaung Copper Mine near Monywa is partially resolved, but could be reignited at any time.

As previously reported by The Myanmar Times, protests over land grabs have broken out sporadically at Letpadaung since Chinese firm Wanbao – a subsidiary of arms manufacturer Norinco – and army-owned Myanmar Economic Holdings Limited signed an agreement to develop the mine in 2010.

The conflict between the company and local residents has impacted other extractive industry players.

“It is becoming more difficult to organise Corporate Social Responsibility [CSR] projects due to the impact of conflicts such as this,” said an official from French energy giant Total, which has been operating in Myanmar for more than 20 years.

For corporations, CSR activities may lead to positive brand perception, while Myanmar has promoted CSR spending because of the benefits it brings to local communities.

Myanma Oil and Gas Enterprise (MOGE) conducted three international bidding rounds in 2011 and 2013 for onshore and offshore oil and gas blocks. A total of 45 onshore and offshore blocks were awarded to international oil companies. The Production Sharing Contracts (PSCs) for awarded blocks have been signed and only a few blocks remain to be allocated to investors.

Those international oil companies must complete EIA/SIA surveys before they can progress to the exploration phase, according to the Ministry of Energy.

However, it is unclear how companies will complete the required reports without a standard EIA/SIA procedure.

The respective government ministries and organisations have negotiated to allow oil companies to proceed with seismic acquisition before the standard procedure is published.

“At the request of related ministries and organisations, we will allow the oil companies to continue their work with the Initial Environmental Examination [IEE] report. The full EIA/SIA reports should be submitted later, once the company reaches the discovery stage in the exploration period,” said U Kyaw San Naing.

UK-based Ophir Energy was the first company to begin a seismic campaign with its IEE report just after it signed a PSC.

So far, around 10 EIA and IEE reports have been presented by oil companies to the ECD, to be approved by the independent review team. A total of 26 local and 24 international organisations are working on EIA/SIA and IEE services at present according to ECD’s records.

“These EIA/SIA service companies or organisations will have to register for a working licence once we have published the EIA/SIA regulations. We will be able to take action against service companies if their reports are not in line with the procedures,” said U Kyaw San Naing.

Publishing a standard EIA/SIA procedure is not the only way to promote transparency, environmental conservation and social well being.

However, MOECAF, which is tasked with overseeing this process, lacks resources.

“The main problem is capacity-building among our staff and the pressure to complete dozens of projects in time,” said U Kyaw San Naing.

He said that the ministry is receiving technical assistance from the Asian Development Bank and the Japan International Cooperation Agency, among other international institutions, but more resources are still needed.

“They need a lot more qualified staff to cope with the influx of new investment as well as the backlog. They will also need to have technical advisers on standby for several years to help them assess the reports they receive,” said Ms Bowman.

“If EIA/SIAs are conducted transparently, to an international standard, they can be used to raise standards across the sector and create more of a level playing field,” she said.

Myanmar became an Extractive Industries Transparency Initiative (EITI) Candidate Country in July 2014. But the process of delivering the first EITI report is still being discussed by members of the Multi Stakeholders Group, which includes representatives from the government, civil society organisations and private companies.

-Myanmar Times