Burma’s president Thein Sein has ordered the suspension of a $3.6 billion project to build a new hydropower project on the Irrawaddy river.

His decision was made “to respect the will of the people” and has been described a “stunning” by environmentalists. The project’s Chinese backers are reported to be considering legal action.

The 3600 MW Myitsome Dam is part of a planned cascade of seven dams in Burma backed by China Power Investment Corporation (CPIC). At least 90 per cent of the energy produced by the mega-project was to be exported to China.

Grace Mang, programme coordinator at environmental group International Rivers, said: “The suspension of the Myitsone Dam is a great success for civil society groups in Burma and throughout the world. The decision shows that dam builders can no longer rely on dictatorial governments to push through projects that are rejected by their populations.”

China is Burma’s second-largest trading partner and biggest foreign investor. Reports indicate that Burma did not inform CPIC of its decision in advance of the announcement at the end of September.

“I … learnt about this through the media and I was totally astonished,” said Lu Qizhou, president of CPIC. “If suspension means construction halt, then it will lead to a series of legal issues.”

He added that suspension would cause “immeasurable losses to both China and Myanmar” and pointed out that significant sums of money have already been invested in the project, on which construction began in late 2009. Resettlement in the dam area has already been completed and site preparations started, said Lu.

According to International Rivers, Burma does not have any environmental protection laws and much less study and planning has been conducted for the Myitsone project compared to the Three Gorges Project.

In August, Burmese pro-democracy opposition leader Aung San Suu Kyi called for a halt to the cascade of dams.