Malaysia's Tenaga may own most of Bakun Dam

Asian Economic News, May 7, 2001

KUALA LUMPUR, May 4 Kyodo

Prime Minister Mahathir Mohamad said Friday that Malaysia's state-owned utility company Tenaga Nasional Bhd. (TNB) may end up owning most of the Bakun Dam hydroelectric project on Borneo Island.

''Tenaga will probably own most of Bakun Dam as Bakun is now looking brighter,'' he told reporters after visiting TNB's headquarters.

Currently, the government -- through its powerful investment holding company, the Ministry of Finance Inc. -- is the majority shareholder in the consortium established to oversee the project.

The brighter prospects for Bakun were attributed to energy shortage problems in the United States, which have affected many aluminum smelter companies there.

Mahathir said those companies are closing down and moving out and ''we may be able to attract some of them.''

The government in February announced it would build the dam in Sarawak state with a capacity to generate 2,400 megawatts of electricity according to original plans, but minus a costly 670-kilometer undersea cable linking the state to peninsular Malaysia.

The 13.5 billion ringgit (about $3.6 billion) project was shelved in 1997 following the regional financial crisis.

In 1999, the government revived the project, but said it would be on a smaller scale, producing 500 megawatts to cater only for Sarawak and neighboring Sabah state at a cost of 5 billion ringgit.

TNB was selected to lead-manage the construction of the project.

Now with the project going full scale, without the undersea cable, the dam is estimated to cost 9 billion ringgit and the government has plans to sell the electricity to Brunei and Indonesia.

The dam has sparked controversy from the beginning, with environmentalists voicing concern about the destruction of large tracts of forest and the relocation of at least 10,000 indigenous people.

When completed, the 205-meter-high dam will have a volume of 15.6 million cubic meters and a reservoir covering 695 square km, an area larger than Singapore.