Bakun hydroelectric dam
KUALA LUMPUR, June 28 ─ For years, the government has snubbed overtures from Sarawak for a bigger management role in the massive RM6 billion Bakun hydroelectric dam, a grandiose project to meet the growing power needs of peninsular as well as eastern Malaysia.
But now the state government’s growing clout in the ruling Barisan Nasional coalition, following the general election in March, has forced Kuala Lumpur to cede greater control over how Bakun is managed to the administration led by Chief Minister Tan Sri Abdul Taib Mahmud.
Well-placed senior financial executives say the withdrawal this week of Sime Darby as the chief driver of the project is a prelude to the Sarawak state government taking a lead role in completing and later managing the hydroelectric dam.
Sime Darby, a conglomerate controlled by an investment fund headed by Prime Minister Datuk Seri Abdullah Ahmad Badawi, announced on Wednesday that it would not take up a government offer to acquire a 60 per cent equity interest in a private company that will operate Bakun.
Sime Darby, which is also the world’s largest palm oil producer, added that it had turned down a government contract to lay two 700km undersea cables to transmit power from the hydroelectric dam in Borneo to Peninsular Malaysia because the project did not “fit in with our business strategy”.
Most bankers welcomed Sime Darby’s move to cut its ties with Bakun because they said it would be a serious drain on the group’s earnings. But they also noted that the rethink was prompted by the growing political clout of the two east Malaysian states in the BN coalition government.
Abdullah’s ruling coalition suffered serious setbacks in the March general election, losing five states to an opposition alliance headed by former deputy premier Datuk Seri Anwar Ibrahim.
That has boosted the bargaining position of the Sabah and Sarawak political parties, which have become crucial crutches in the BN’s hold on power in the federal Parliament.
In recent weeks, the Prime Minister has promised the restive elected representatives in Sabah increased funding for the state and pledged that his government would take action to tackle the longstanding problem of illegal immigrants mainly from the troubled southern regions of the Philippines.
Sarawak’s elected representatives have been less vociferous, but political analysts say that the move to give the state a greater say over Bakun is being viewed as a sign that Abdullah’s government is becoming more sensitive to the needs of the state.
The Bakun project has a chequered history. The project was conceived by the previous government of Tun Dr Mahathir Mohamad and was originally awarded to Ekran, a construction company controlled by businessman Ting Pek Khiing.
But the plan stumbled because of the Asian financial crisis, which began in mid-1997, and debt problems at Ekran.
The government took over the project and later awarded part of the construction works to Sime Darby.
Sime Darby said this week that it would continue its role as contractor to complete the construction of the dam.
Banking sources say the conglomerate is also expected to make a claim of roughly RM200 million from the government for losses suffered in the construction of the project.
Second Finance Minister Tan Sri Nor Mohamed Yakcop told reporters on Thursday that the government would seek new contractors following Sime Darby’s decision.
“It is not derailed. The project will go on,” he said.
He added that state electricity firm Tenaga Nasional could lay the cables from Bakun to the mainland. ─ Singapore ST