October 3, 2011 / 8:50 PM / 8 years ago

China firm "shocked" by Myanmar dam halt

* Head warns of “immeasurable” losses, legal consequences

* Blames western environmentalists for interference

Oct 3 (Reuters) - The Chinese state-owned firm involved in a stalled $3.6 billion dam in Myanmar expressed shock on Monday at the Myanmar government’s decision to suspend the project and warned of legal consequences.

Lu Qizhou, general manager for China Power Investment Corp, told the official China News Service that the suspension of the Myitsone dam, Myanmar’s largest hydropower project, would cause “immeasurable losses” for both sides.

“If the suspension means stopping construction, it will cause a series of legal problems,” Lu said, adding that large compensation claims could be made by related parties, and Chinese banks might stop providing loans to the project.

Lu said he hoped that, with “persistent efforts”, the project would be resumed.

Following weeks of rare public outrage against the Myitsone dam, Myanmar President Thein Sein told parliament on Friday that his government had to act “according to the desire of the people”.

The move by Thein Sein is likely to anger China — Myanmar’s biggest economic ally — but could boost his popularity at home and help gain some acceptance for a government which came to power in an election last year widely dismissed as a charade.

Myanmar’s government proposed the dam in 2006 and signed a contract with Beijing in 2009 for Myanmar’s state-owned Asia World Company and China Power Investment Corp to jointly carry out its construction.

Thein Sein last week decided to shelve the project until his five-year term is completed in April 2016. China’s Foreign Ministry said on Saturday that “relevant countries should guarantee the legal and legitimate rights of Chinese companies”.

Lu took a less diplomatic line and chided western environmental groups, which he said were interfering by putting pressure on the government, which ultimately would prove costly for Myanmar’s people.

“Now these organisations are intervening in the Burmese government’s economic development projects that will improve people’s living,” he said.

“I don’t know what their true purpose is. But I’d like to ask, have these organisations tried to help Myanmar when the Burmese people were in their most difficult times?”

The northern dam would have flooded an area about the size of Singapore, creating a 766-square-km (296-square-mile) reservoir, mainly to serve China’s growing energy needs. China would have imported 90 percent of its power.

It had become a symbol of resentment over China’s growing influence and exposed divisions rarely seen in Myanmar’s leadership, making it the first real public test over whether reformers or hardliners had more sway over the country’s direction. (Reporting by Zhou Xin; Editing by Martin Petty)

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