SN Power is aim­ing to play a key role in de­vel­op­ing Asia

Global power de­vel­oper with more than a hun­dred years of ex­pe­ri­ence is aim­ing to play a key role in de­vel­op­ing South­east Asia

Norway-Asia Business Review - - Contents - HENRI VIIRALT

In 2002, two Nor­we­gian state en­ti­ties joined hands to es­tab­lish a xhy­dropower com­pany that would eventually be­come an in­ter­na­tional player a man­date to con­trib­ute to eco­nomic growth and sus­tain­able de­vel­op­ment in emerg­ing mar­kets. Statkraft Nor­fund Power In­vest AS (SN Power) was a 50/50 joint ven­ture be­tween Statkraft and Nor­fund (Nor­we­gian In­vest­ment Fund for De­vel­op­ing Coun­tries), which even in its first few years of op­er­a­tions man­aged to en­ter Sri Lanka, Peru, In­dia, Chile, Nepal and the Philip­pines in rapid suc­ces­sion. Al­though it is look­ing at other re­new­ables as well, when it was de­cided that the com­pany would stretch out­side of the Nordic re­gion, it would bank on its core com­pe­tence, hy­dropower, which cur­rently makes up 19% of the global elec­tric­ity sup­ply and nearly 98% in Nor­way. In 2013, Statkraft and Nor­fund signed an agree­ment to re­struc­ture and pro­long their co­op­er­a­tion within the re­new­able en­ergy sec­tor, cre­at­ing a new com­pany, SN Power AS, with a fo­cus ex­clu­sively on de­vel­op­ments in South­east Asia, Africa and Cen­tral Amer­ica.

Jan Ced­er­wall, Coun­try Di­rec­tor, Myanmar, draws upon 25 years of power de­vel­op­ment ex­per­tise ins South­east Asia, hav­ing de­vel­oped gas, coal and hy­dropower projects for SN Power and its pre­de­ces­sors Nordic Power In­vest and Nordic Hy­dropower. “This en­tire South­east Asian re­gion needs power. It’s growing very quickly and elec­tri­fi­ca­tion is still at a very low level. We know that power is a key el­e­ment in the de­vel­op­ment in any coun­try, and cur­rently only 1/3 of the pop­u­la­tion in Myanmar has ac­cess to it. There is a lot of un­tapped po­ten­tial here,” Mr Ced­er­wall said. He is quick to point out how cru­cial it is to de­velop projects in a sus­tain­able way, not driv­ing peo­ple off their lands and de­stroy­ing nat­u­ral habi­tats. All the projects that are be­ing con­sid­ered need to sat­isfy a va­ri­ety of tech­ni­cal, eco­log­i­cal, so­cial and fi­nan­cial cri­te­ria, and play an over­all part in de­vel­op­ing the host coun­try. “Iden­ti­fy­ing projects is a long and care­ful process. There have to be cer­tain nat­u­ral el­e­ments present, such as rivers and moun­tains with enough wa­ter flow­ing down­stream; that’s the start­ing point. If you look at a map of South­east Asia, the cen­tre part is largely flat. The moun­tains, cre­at­ing a horse shoe around Thai­land, are in Laos, Myanmar and Viet­nam, and these coun­tries have a lot of hy­dropower to har­ness.” Once a po­ten­tial site is con­firmed, the next phase will deal with iden­ti­fy­ing what im­pact the project may have on the sur­round­ing flora and fauna, not to men­tion the lo­cal com­mu­ni­ties. If there will be an im­pact, is there a way that SN Power can mit­i­gate it, or will the project do more harm than it’s worth? This study phase will typ­i­cally take any­where be­tween 2-5 years. Work­ing in a coun­try like Myanmar can be ex­tremely chal­leng­ing at times and take a cer­tain leap of faith as the coun­try is go­ing through decades’ worth of changes in a mat­ter of years, which means that pre­dictabil­ity be­comes of the ut­most im­por­tance. That be­ing said, there is no “pre­set for­mula”. Each project is unique in its own ways. SN Power builds on Statkraft’s more than a hun­dred years of de­vel­op­ing hy­dropower and the part­ners are cho­sen to in one way or another com­pli­ment that knowl­edge. “The most fea­si­ble way to work in a fast de­vel­op­ing coun­tries is to try and part­ner with gov­ern­ments. In Laos we’ve man­aged to do just that and we’re try­ing for a sim­i­lar setup in Myanmar. These investments are huge and their im­pact is also con­sid­er­able, so it makes sense to have them as a part­ner. If the rules and reg­u­la­tions sud­denly change, we can stand to lose a lot of money.” There­fore, hav­ing a very close, in­ter­ac­tive di­a­logue with the host government is one of the key in­gre­di­ents of a suc­cess­ful project. How­ever, Myanmar has an in­her­ent need to de­velop power and they need to do it on their own terms, but Ced­er­wall says that it’s al­ways good for the government, too, to have a strong part­ner with rel­e­vant ex­pe­ri­ence to con­sult with. As such, this sym­bio­sis achieves a mea­sure of pre­dictabil­ity and risk mit­i­ga­tion for both sides. As of now, SN Power has signed a mem­o­ran­dum of un­der­stand­ing with the government of Myanmar for its first power plant in the coun­try, called Mid­dle Yeywa. It’s lo­cated on the My­it­nge (Nam Tu) river, up­stream of the op­er­at­ing 790 MW Yeywa Hy­dropower sta­tion, in Shan State. The prefea­si­bil­ity find­ings show that the project “ap­pears to be tech­ni­cally, so­cially and en­vi­ron­men­tally vi­able”, and es­ti­mated to de­liver ap­prox­i­mately 3.2 TWh an­nu­ally. This in­her­ent need to quickly ramp up power sup­plies in the coun­try to match the fast pace of de­vel­op­ment can cre­ate a sit­u­a­tion where for­eign com­pa­nies will try to pitch and win projects, re­gard­less of the im­pacts they will have.

There are sev­eral power projects in Myanmar that have re­ceived strong crit­i­cism in the me­dia, mostly due to their lack of com­mu­ni­cat­ing with lo­cal com­mu­ni­ties, some­thing that he con­sid­ers ab­so­lutely es­sen­tial. In­deed, even the Mid­dle Yeywa project has had its nay-say­ers in the press, but for slightly dif­fer­ent rea­sons. “Some peo­ple are say­ing that we shouldn’t go to Shan state be­fore there is peace there, but the way we see it is that if you let the dif­fer­ence in de­vel­op­ment be­tween Shan and neigh­bour­ing states be­come too great, it will only add to the so­cial ten­sion. Hav­ing elec­tric­ity and the busi­ness en­vi­ron­ment that will nat­u­rally grow around it is to ben­e­fit all peo­ple in

the area, re­gard­less of where they come from or what their eth­nic­ity may be.” The busi­ness en­vi­ron­ment that Mr Ced­er­wall is talk­ing about comes in the form of job cre­ation, busi­ness and in­fra­struc­ture. “In our ne­go­ti­a­tions with the Shan state, they are ac­tu­ally very wel­com­ing of the project since they un­der­stand that we’re bring­ing busi­ness there, which will spur fur­ther growth and de­vel­op­ment.

So­cial and en­vi­ron­men­tal prob­lems are ex­tremely im­por­tant for us and we would never build a project with­out hav­ing a so­cial li­cense to do so, we need to make sure the peo­ple are cared for, but also to have a plat­form to dis­agree with one as­pect or another. Per­haps our big­gest strengths, as a com­pany, is that we’re al­ways work­ing with lo­cal com­mu­ni­ties.” In some cases, where some mit­i­ga­tion of neg­a­tive ef­fects has to oc­cur for the project to move for­ward, the cost of build­ing new hous­ing, roads, clin­ics, schools are all fac­tored in the frame­work. Once the con­struc­tion of the plant is fin­ished, these struc­tures will re­main there to be taken over and run by the lo­cal com­mu­ni­ties. “We’re aim­ing to bring much more than merely power to the peo­ple. They still need to eat, some­where to stay, clothes on their back. In Laos for ex­am­ple, there’s a 5,000 peo­ple strong vil­lage out­side of the plant. It didn’t ex­ist be­fore we built the plant.” Of his plans for Myanmar, Mr Ced­er­wall re­mains op­ti­mistic for the coun­try as a whole but recog­nises the chal­lenges ahead. The coun­try is still full of frac­tions and unit­ing them will take time, ded­i­ca­tion and a whole lot of hard work. “When we started in Laos two decades ago, we were work­ing on the first pri­vately fi­nanced hy­dropower project in the coun­try. We’re now among the first com­ers in Myanmar. Will we ul­ti­mately be suc­cess­ful? Check back in 10 years.

PHOTO: SN POWER/JAN CED­ER­WALL

Up­per Left: Mid­dle Yeywa on the My­it­nge (Nam Tu) river is SN Power’s first project in Myanmar. Above: Mr Jan Ced­er­wall, SN Power’s Coun­try Di­rec­tor for Myanmar. PHOTO: SN POWER/JAN CED­ER­WALL

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