The railway will be the first phase of a project connecting a gas pipeline from Arakan State to Yunnan Province in China, the New Light of Myanmar reported on Thursday. The gas pipeline will transport oil and gas from the Middle East and Arakan offshore gas fields to China.

A memorandum of understanding (MoU) was signed between the Myanmar Railway authority and the Chinese state-owned company, China Railway Engineering Corporation, on Wednesday in Naypyitaw. Thiha Thura U Tin Aung Myint Oo, vice president and vice chairman of the special state projects implementation committee, observed the meeting.  

Li Chang Jin, the chairman of the China Railway Engineering Corporation, various ministers and the state attorney general also attended the signing ceremony. U Thein Swe, director general of the Myanmar Railway and Zhao Deyi, a representative of the Chinese company signed the agreement.

According to sources, the railway connecting Muse and Lashio will be 80 miles long and will include 41 bridges, 36 underground tunnels and seven railway stations and take three years for construction to be completed.

Although the Burmese government does not declare the cost of such projects, the Shwe Gas Movement, an activist group campaigning for energy accountability in Burma, has estimated that the oil-and-gas pipeline to be built by the Chinese state-owned company CNPC and the Myanmar Oil and Gas Enterprise (MOGE) will cost at least US $1.5 billion.

China Petroleum Pipeline Bureau (CPP) will build the pipeline, which will start at Maday Island in Arakan State and pass through Amm Township of Arakan State, Mandalay Region and Northern Shan State, crossing into China through Muse Township in Shan State.

‘The pipeline will go from the east of the Lashio-Muse road in Northern Shan State and it will cross into China through the 105-mile Border Checkpoint into Wandien, China. It will cross into China between Kyu-koke, Pan Seng and Muse and link Ruili in China’, U Aung Kyaw Zaw, a China-based Burma analyst told Mizzima.

He said the Kokant ethnic armed group and the Kachin Independence Organization’s 4th Brigade have been operating near the pipeline route in Northern Shan State; they would be reluctant to obstruct the plan, since it would damage their relationships with Chinese authorities.

Although some Arakan residents will lose their land along the route of the oil-and-gas pipeline and railway construction, Dr. U Aye Maung, the chairman of the Rakhine (Arakan) Nationalities Development Party (RNDP) said he welcomed the project because it would develop Rambree Island in Arakan State.

‘But I have concerns that the Chinese will take over Kyauk-Phyu and in the future, it may become a Chinese city like Mandalay. Also, some Arakans will have to relocate to remote areas like Taung-Goke and they will lose their livelihoods because of the project’, he told to Mizzima.

The project consists of deep seaports in Kyauk-Phyu Township and Maday Island, fuel and natural gas storage tanks, an oil refinery and a gas separation plant. Daewoo, a Korean company, and some Chinese companies have started infrastructure construction on the site. Official sources said the construction project will finish in 2013.

President U Thein Sein, the chairman of the special state projects implementation committee, has said that state infrastructure projects which were started by the previous military government must be finished within three years.

Although there is no construction activity yet in Muse, Aung Kyaw Zaw, a Burma watcher along the Sino-Burma border, said he has noticed 10-wheel trucks carrying steel pipes crossing into Burma starting last month.