By Shoon Naing and Yimou Lee
YANGON (Reuters) - Opposition to a planned $3 billion coal-fired power plant in eastern Myanmar is highlighting the challenges facing Aung San Suu Kyi's government in crafting a coherent energy policy in one of Asia's poorest and most electricity-starved countries.
With only a third of the country's 60 million people connected to the grid and major cities experiencing blackouts, finding investors is tough for Myanmar and it is now looking at options, from coal to deep-sea gas, to boost its power supply.
Myanmar has reserves of natural gas, but most existing offshore production is exported under agreements struck during the junta era, while new blocks will not come on stream for some years.
Coal would be one of the quickest ways to ramp up power generation but, as protests against the proposed 1,280 megawatts (MW) project in the eastern Kayin state show, the option is unpopular in Myanmar.
More than 100 activist groups across the country have signed a joint statement calling for the project to be canceled and urging the government to look at renewable energy instead.
"They are worried about their land and water, which would be affected by the coal-fired plant," said Kayin-based activist Nan Myint Aung, referring to residents in the area who mostly depend on agriculture.
Attracting investment is crucial for Suu Kyi, who has made job creation one of her top priorities. Foreign direct investment has fallen 30 percent from the previous year to $6.6 billion in 2016/17 due to sluggish progress on retooling the economy after decades of military rule.
Myanmar aims a more than fourfold increase in its electricity generation of over 23,500 MW by 2030 to meet rising demand, a target experts said will be difficult to achieve - particularly, they say, if policy remains confused.
UNCERTAINTY OVER ENERGY MIX
The Kayin state project, which is still awaiting approval from the authorities, is among the 11 planned coal-fired plants in Myanmar and, by itself, would increase the country's current electricity production by 25 percent, official data shows.
But it is uncertain how many of those projects will go ahead. The former quasi-civilian government led by President Thein Sein had to stall more than 10 coal projects across the country due to opposition on environmental grounds.
Some western experts advising the government also oppose the solution, arguing that importing coal - which is not abundant in Myanmar - would mean an outflow of dollars from a country with tiny reserves of hard currency.
Officials have previously said they were looking to increase the share of hydro power in the country's energy mix.
Most of its 49 planned hydropower projects have stalled, however, amid a lengthy dispute with China over the building of the Myitsone mega dam.
An electricity master plan has been under review since last year, but the government has yet to reveal details. Several energy officials said the share of coal and gas could be increased at the expense of hydro.
"International investors would like to see more clarity on energy policy. It is presently very difficult to say exactly what Myanmar's energy plans are," said Jeremy Mullins, researcher at Yangon-based consulting firm Frontier Myanmar.
"DILEMMA OF COAL"
Kayin's energy minister, Soe Hlaing, told Reuters that the government would go ahead with the project if there was "enough public support." He did not elaborate.
Residents and environmentalists say the risks the plant in Kayin could pose to the environment and the livelihoods of local people are not being properly investigated.
A feasibility study on the environmental and social impact will be ready later this year before the final decision from the energy ministry, local authorities said.
Thailand-based TTCL Public Company Ltd, developer of the project, said it would build a high-efficiency low-emissions station with advanced "clean coal" technology to mitigate environmental impact.
Coal currently generates just 1 percent of Myanmar's electricity.
Win Htein, one of the top leaders from Suu Kyi's National League for Democracy, said alternatives such as hydropower would take time and coal was ideal for the country's urgent energy demand.
"If we have to choose between the dilemma of coal and the development of the country, we prioritize the development," he said.
(Reporting By Shoon Naing and Yimou Lee; Editing by Alex Richardson)