http://www.earthisland.org/borneo/news/articles/010408article.html

Bakun Dam to Go Ahead at Full Size

By Harlan Thompson

April 27th, 2001
From the Borneo Project

In late February, Malaysian Prime Minister Mahathir Mohamad announced that the Bakun Dam will not only be completed, but will be built at the original 2,400 kilowatt (kW) size. The dam, which will flood an area of forest the size of Singapore, is being constructed in the remote interior of the Malaysian province of Sarawak, on the island of Borneo. It has been dogged by controversy and financial troubles since its inception, and more than once assumed to be cancelled.

This announcement has surprised and dismayed economists, because there doesn't seem to be enough demand to use the electricity produced. Sarawak and neighboring state Sabah are both use only 30% of the energy current facilities can create. When the dam was approved in 1994, up to 90% of the energy created was intended for export to Peninsular Malaysia via a 250 underwater cable. This idea was finally scrapped when it became apparent such a cable would be too technically difficult and expensive.

When the economic crisis hit Asia in late 1997, the Bakun Dam was cancelled. It was later revived, at a much smaller scale of 500 kW - more in line with the actual energy needs of Sarawak. At full scale, the 2400 kW created will be 2.5 times more than the projected peak demand for Sarawak and Sabah combined. Without the cable, where will the electricity go? The government says it hopes to sell the excess energy to Brunei and the Indonesian province of Kalimantan. However, both Brunei and Kalimantan are oil rich, with electricity plentiful and at rates much lower than in Sarawak. Furthermore, there is no electrical transmission infrastructure to these places. Even transmission between Sarawak and Sabah will likely prove too expensive to build, as these neighboring provinces aren't yet connected by road. The government hopes that energy intensive industry will come to the electricity. But this also is not very likely, due to the dam's remote location, and the likelihood that electrical rates will remain high to offset the government's cost of the dam.

Why then, is the dam being built at the original, full scale size? In a word, politics. The announcement to revive the dam comes during an election campaign, with a general election coming up later this year. The ruling party hopes the dam will win votes by creating jobs and pumping money into the economy. Already, half a billion dollars has been spent on the dam. Further construction will cost $2.5 billion, plus cost overruns (the World Commission on Dams recently released a finding that large dams exceed their budgets by an average of 50%).

More disturbing are the familial politics. According to reporter Michael Backman of the Melbourne Age, the company set to win lucrative contracts in the construction and running of the dam will be the CMS Group, owned by the family of Abdul Taib Mahmud, Sarawak's Chief Minister. CMS Group's subsidiary CMS Cement is the only company eligible for the cement contract. Another CMS Group subsidiary, PPES Works, is expected to received valuable construction contracts. Yet another subsidiary, Bank Utama, is likely to help finance the project. CMS Group actually has over 40 subsidiaries involved in infrastructure development, from water supply to steel making, and many will be making money from the dam. A recent analysis by the Far Eastern Economic Review shows that most of the remaining companies placing bids of dam work are owned by, or have close ties to, Malaysia's Prime Minister, Finance Minister and/or other politically powerful people.

While no one knows his exact worth, Taib has made billions of dollars during his 20 years as Chief Minister. The timber concessions held by Taib and his family have been estimated by one of his relatives to be worth approximately $12 billion dollars, and this is only part of his total wealth. The original bid for the dam in 1994 was not publicly tendered. None of the feasibility studies have been made public. Environment Impact Assessments (EIA) are required by law, but apparently no EIA will be conducted on the latest dam plans. Taib also directly or indirectly controls all the media outlets in Sarawak. Its no surprise that Chief Minister Taib has been the major force pushing for the full sized dam.

But the Bakun Dam is not merely a costly white elephant. What makes it tragic is the destruction its construction will cause. Already, 10,000 people have been forcibly relocated from their ancestral homes to make way for the new dam. They have been placed in a relocation village named Asap, with few economic opportunities nearby. Some have refused to move to Asap, and others are likely to move back to the forest once the money paid in compensation by the government runs out.

Inside the dam's flood zone are at least 12 (supposedly) protected animals species and 93 protected plants. The number of endangered species in Sarawak has doubled over the decade, and projects like this dam will only boost that number. There are also concerns that the dam will have a negative impact on the Rajang River, the longest river in Sarawak, lowering water levels and degrading the fish habitats and fisheries downstream.

Ironically, while the Bakun Dam will produce more energy than anyone can use, most interior villages will not benefit at all, even villages in sight of the Bakun Reservoir! Most interior villages have never been connected to the power grid. Borneo does have great hydroelectric potential, but what is needed are smaller micro- and nano- hydro projects, each giving power to villages a mile or two away. Such in situ projects don't block rivers, or displace people, and give power to where it is needed.

Politicians prefer grandiose projects over many small projects, and the Bakun Dam is the largest civil engineering project ever in Southeast Asia. Whether or not the dam will actually be completed or just fade away after the election remains to be seen. It appears the government was unsuccessful in attracting any foreign investment for the dam. The most recent plan is to finance the dams through "Islamic" bonds sold in Malaysia. Exactly how this will work and if it will work remains uncertain. A few months ago, the Malaysian government tried to create a fradulent bond on the world market, by making up false financial information instead of backing the bond with real collateral. Luckily, they were caught, but the incident shows how financially strapped Malaysia is. Hopefully the Malaysian public will see through the "Islamic" bond scheme, and the Bakun Dam will never be finished.