Headaches over Malaysia's Bakun
dam By Chee Yoke Heong
It has
been 11 years since Malaysia's Bakun Hydroelectric
Project in Eastern Sarawak - the largest dam ever to be
built in Southeast Asia (and Asia outside of China) -
was first approved for construction. But today, after a
series of postponements and revivals, scale-backs,
controversies and various other difficulties, both
financial and political, its completion remains elusive
as it struggles with numerous problems that seem to be
increasing by the day.
The RM9.12 billion
(US$2.4 billion) project, originally scheduled for
completion in 2003, now aims to be completed by 2007.
Although Prime Minister Abdullah Ahmad Badawi insisted
last week that that deadline will be met, quelling
speculation that the project would be scaled down or
shelved, observers are not hopeful. Inside sources
reportedly have said the project is delayed by about
nine months, citing organizational and construction
problems. An international engineering consultancy firm,
J W Knowles, has been contracted to study the delay in
the dam's construction.
According to Abdullah,
the dam is needed to meet the growing demand for
electricity in Malaysia. However, most of the growth in
demand for electricity is not in Sabah and Sarawak,
where the dam is located, but in the peninsular.
The problems are manifold it seems, and they are
not confined to the construction of the dam itself. For
one, the proposal of a billion-ringgit aluminum smelter
plant to be set up in Similajau, Bintulu, by a Malaysian
corporate leader and a Dubai investor, has fallen
through. For another, plans are said to be underway for
the development of more power plants in Sarawak. Such a
move would create competition for Bakun, which is
already facing problems in securing buyers for its
electricity.
Since July, when the government
said it might review the project after struggling to
find buyers for the power generated by the dam,
speculation began in earnest as to whether the project
would be scaled down or postponed. The prime minister's
recent assurance that the project will be completed by
2007 has quashed such talk, at least for now.
The Bakun project has a long history of problems
and has been mired in controversy since it was first
proposed in the early 1980s. Situated in a fragile
tropical forest habitat the size of Singapore and
requiring the relocation of more than 9,000 people, the
project has long been criticized as environmentally
unsound and socially disruptive.
The original proposal - put forth in
the 1980's, abandoned in 1990 and then revived and agreed to in
1993 - was to send 70% of the power generated
by the Bakun dam to Peninsular Malaysia through 668 kilometers of
overhead lines in Sarawak, 643 kilometers of undersea submarine cables and 458 kilometers of
distribution infrastructure in the peninsula. After
being suspended at the height of the Asian economic
crisis in 1997 and then fully revived in 2000, the size
of the project has since been scaled down - it no longer
includes the undersea cables.
Besides flooded
forests and displaced inhabitants, concerns included the
possibility of dam collapse, earth tremors, new
waterborne diseases (including shistosomiasis,
opisthorchiasis, malaria and filariasis), disruption of
downstream water quality, and sediment accumulation
behind the dam that would render it useless within 50
years. The amount of area given over to the dam would
also result in the loss of approximately 23,000 hectares
of good agricultural land.
The dam's economic
viability also has been questioned, especially in the
face of difficulties in attracting foreign investors and
uncertainties about its cost. When the Asian financial
crisis hit the country in 1997, these economic concerns
along with worries of a growing current account deficit
forced the project's postponement. Despite the decision
to suspend the project, some construction work,
especially the construction of the river diversion
tunnel, went on uninterrupted. Resettlement also
continued, apparently in case the dam was someday
revived. Thus even on the shelf, the Bakun project
continued to disrupt the lives and livelihoods of people
in the area.
With the halting of the Bakun
dam, the project was handed over to the Malaysian
government. The project had initially been undertaken by a
joint-venture company led by publicly listed Ekran Berhad and
comprising the state government of Sarawak, Tenaga
Nasional Berhad (TNB), Sarawak Electricity Supply
Corporation (Sesco), Malaysia Mining Corporation Bhd
(MMC) and others. Ekran's chairman, Ting Pek Khing, was
known to be close to then-prime minister Mahathir
Mohamad and other leading politicians.
The
appointment in 1994 of Ting, the Sarawak businessman and
timber tycoon, and his company, Ekran, has been
controversial as Ting had no experience in dam building
and the project was awarded without a tender. What he
did have, however, was Mahathir's confidence. Through
intense private lobbying, Ting managed to convince
Mahathir that his company could deliver the project
quickly.
But though Ekran's involvement in the project
has now ended, Ting is not totally out of the
picture. In May of this year, Global Upline, a company
linked to Ting, was awarded the biomass removal job,
which involves clearing the jungle that will be flooded
by the Bakun dam.
Since the revival of the
project in 2000, the main civil works contract has been
awarded to a consortium, a 70:30 joint venture, the
Malaysia-China Hydro Joint Venture led by Malaysia's
Sime Engineering, which began work in August 2003. If
the allegation that the project is nine months behind
schedule is true, its impact, at worst, could cause a
review of the award of the project.
It could
also have a domino effect in the sense that it will then
delay the delivery of water from the dam, which would
then delay the delivery of power to the planned aluminum
smelter - a joint-venture project between Dubai Aluminum
Co Ltd (Dubal) and Gulf International Investment Group
(GIIG), an investment fund jointly set up by Malaysian
tycoon Syed Mokhtar and Dubai-based international
financier Mohamed Ali Alabbar - located some 180
kilometers inland from Bakun in Sarawak. For now, plans
for the the smelting plant have been set aside while the
government sorts out the construction problems faced by
the project. Under the plan, however, the plant would
have absorbed 50% of the power generated by the Bakun
dam, making it the largest customer for the 2,400
megawatt project.
The government also had
initially planned to sell 60% of Sarawak Hidro, the
wholly owned company of the Ministry of Finance and the
current owner and promoter of the Bakun dam to GIIG
Capital. The prime minister, who also serves as finance
minister, said that an agreement signed in 2003 between
the Finance Ministry, Sarawak Hidro and GIIG Capital has
lapsed because some conditions under the pact were not
met within the stipulated timeframe. GIIG had wanted to
gain control of the project to ensure power supply for
the aluminum smelter it wants to develop by 2007. The
fact that GIIG would be part owner of both the smelter
plant and Sarawak Hidro has raised worries of a conflict
of interest among observers.
Meanwhile, reports
have said the Sarawak state government has not
discounted the possibility of other power plants being
set up in the state. If such a move does take place,
it's unlikely that the state government would sign power
purchase agreements with Sarawak Hidro for the power
from Bakun, thus leaving the project in a deeper
quagmire.
There has been talk that the
government might have to consider the ambitious plan to
feed some of the power from Bakun into what has been
described as the Trans-Borneo Power Grid
Interconnection, a Borneo grid linking Sarawak,
Indonesian Kalimantan, Brunei and Sabah. Although
government officials and industry people from the
Association of Southeast Asian Nations have been talking
about such a grid, the practical difficulties involved
would be overwhelming. If previous experience is of any
measure, the task would be unlikely to pull through. In
which case the Bakun dam would have to be sent back to
the drawing board - once again.
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