Malaysia to proceed with controversial Bakun dam project

Malaysia to proceed with controversial Bakun dam project

Agence Fraance-Presse
Kuala Lumpur

Malaysia will proceed with its controversial plan to build the
4.5 billion ringgit (US$1.2 billion) Bakun dam in the jungles of
Borneo but the existing project will have to be restructured
first, deputy prime minister Najib Razak said on Monday.

"It is on, except we will look at how we want to restructure
it. It is on, it is not off," he told an economic conference.

"This government will continue to prioritize our plans based
on affordability and cost and the impact on long term
competitiveness and benefits to society," Najib added.

There has been speculation in the past that the government
planned to pull out of the controversial project in eastern
Sarawak state on Borneo island.

But Najib said the government was carrying out a review of the
planned dam.

"We are undertaking a review of the Bakun hydro-electric
project to see how we can best undertake it based on our future
energy needs," he said. Najib did not elaborate.

Nor Mohamed Yakcop, second finance minister said the
government now planned to hold a 100-percent stake in the dam
after previously considering selling a stake to an aluminum
smelter.

When asked if that meant the government had now ruled out the
possibility of selling a stake in the longer term, he said: "Of
course anything can happen in the long term. But for the time
being, the government will own Bakun."

Asked if the government intended to scale down the project,
Nor Yakcop said the Cabinet would decide that later.

A local news report earlier this year said consideration was
being given to scaling down the size of the project because of a
lack of firm takers for power, apart from the aluminum smelter.

The smelter is part of a $2 billion project in eastern Sarawak
state by GIIG Capital, which is controlled by tycoon Syed Mokhtar
Albukhary. The fate of this project itself is in question after
its Dubai-based partner pulled out last December.

The government has been scaling back on major infrastructure
projects since Prime Minister Abdullah Ahmad Badawi took over
last October from predecessor Mahathir Mohamad who had favored
such schemes.

The dam, which was initiated by Mahathir, was taken over by
the government and revived in 2001 after it was shelved during
the 1997-1998 Asian financial crisis when the main operator fell
into debt.

Sarawak Hidro Sdn Bhd, the operator of the dam has so far
spent about 1.5 billion ringgit and the project is expected to
eventually cost 4.5 billion ringgit.

The dam, which involves flooding an area the size of
Singapore, has attracted fierce criticism because of its harmful
impact on the environment and the fact that 10,000 residents have
already had to evacuate the project site.