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

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

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 environmental group 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.