Dungau: Don’t take negative stance on Baram dam project

8 May 2011

MIRI: Residents in Baram should not take a negative stance over the state government’s plan to build a hydroelectric dam in the rural district as the project would stimulate more development.

Baram MP Datuk Jacob Dungau Sagan said the project would stir economic activities and improve infrastructure standards in the area in the long run.

Although there might be a loss of some landed property, he assured that the government wanted a “win-win” situation with Baram’s people.

Speaking at the opening of the Sarawak National Kenyah Associa­tion (PKKS) biennial general meeting here yesterday, Dungau said the state’s plan to build the dam was to expedite Baram’s development.

The Deputy International Trade and Industry Minister said the decision to build Baram’s hydroelectric dam, projected to generate about 1,000 megawatt of electricity, was re-affirmed by Chief Minister Tan Sri Abdul Taib Mahmud in last month’s state election.

Dungau, who is also PKKS patron, urged the association to help shape the mindset of the Kenyah community, one of the minority groups in the country, to be far-sighted and plan for their future generations.

He said the community, with a population of just about 70,000 nationwide, could contribute effectively towards nation building. — Bernama

Source: The Star Online

URL: http://thestar.com.my/news/story.asp?file=/2011/5/8/sarawak/8641511&sec=sarawak

Bakun Dam saga enters next chapter

20 April 2011

Behind The News - Yap Leng Kuen

Should project be viewed as a business deal or part of state development?

THE protracted story of the Bakun Hydroelectric Dam project, instead of ending soon, may be just going into its next chapter.

The latest saga in the tariff pricing disagreement between Sarawak Hidro Sdn Bhd, owner and developer of the dam, and Sarawak Energy Bhd (SEB), the offtaker and state utility board, is entering its fourth scenario.

The first round of talks just after the completion of the dam looked at its possible sale or lease; subsequently, Sarawak expressed its intention to buy over the dam.

News surfaced recently that the sale of Bakun was off and that it would be operated on a joint-venture basis.

The latest is that SEB has proposed to buy a 30% stake in the project.

The power negotiations too have undergone three changes from earlier suggestions of flat to escalating tariffs. Currently, the offer is for a starting tariff of six sen per KwH.

In February this year, SEB had indicated it was willing to pay six sen per kwh but Sarawak Hidro said it needed a flat rate of 9.5 sen per kwh on a 30-year concession.

On an escalating basis, SEB had offered 5.4 sen per kwh at 1.5% per annum (inclusive of a one sen water tariff to the state); Sarawak Hidro had countered with 6.75 sen per kwh, also at 1.5% per annum.

The power purchase agreement (PPA) negotiations went on a rocky path last month with different instructions from the state and federal governments. Early last month, the PPA talks were ordered off by the state and later in the same month, the federal government expressed the desire for the PPA to be concluded as soon as possible.

The question here is whether the Bakun Dam project should be viewed as a purely business deal or part of the socio-economic development of Sarawak?

As a business deal, the Government should make every effort to recover its investments.

If it wants to play its developmental role, it may consider taking a hit and absorbing some losses while helping Sarawak to achieve its industrial goals.

Under the study conducted by PwC, it is believed that the Bakun project is valued at between RM8bil and RM10bil; however, Sarawak's latest tariff offer of six sen per kwh values it at only RM6bil.

In contrast, coal-fired tariffs cost 28 sen per kwh.

Some ask if giving a hefty discount is justified, as more expensive dams are coming up. They say it is not fair that power from Bakun has to be sold cheaply to subsidise the construction of these additional dams.

Others want to know why the cost of transmission via the new grid system is much higher, at over four sen per kwh compared with the cost of only one sen in the peninsula.

Sarawak has said it needs 6.000MW-7,000MW of power by 2020. Bakun has a capacity for 2,400MW and Murum is able to produce 944MW.

Others still pose questions on why polluting industries should take advantage of the cheap, clean power from Bakun.

These heavy industries located in the Sarawak Corridor of Renewable Energy (SCORE) have rebutted that they use advanced technology that do not pose a threat to the environment.

Scare tactics have been used which speculated on the possibility that the Bakun Dam project could end up being a white elephant if industries were not attracted to soak up the power at competitive rates.

Looking at the power requirements of Peninsular Malaysia beyond 2015, this power from Bakun may be transmitted back to the peninsula. Is it worth it to revive the idea of building the undersea transmission line especially in the wake of the nuclear scare and the limit on Malaysia's carbon footprint under the now expired Kyoto Protocol?

Already the pressure is on to conclude the tariff negotiations. Sarawak has signed non-binding agreements with four companies to supply power. Their plants are at the preliminary stages of planning and construction.

Source: The Star Online

URL: http://biz.thestar.com.my/news/story.asp?file=/2011/4/20/business/8516081&sec=business

River travel along Rajang expected to return to normal by next month

2 May 2011

By STEPHEN THEN
stephenthen@thestar.com.my

MIRI: River travel for more than 30,000 residents living along the country’s longest river — the Rajang River in central Sarawak — is expected to return to normal by next month.

The water level is expected to start rising to its normal height again next month once the water from the Bakun Dam reservoir starts to flow into the Rajang after the impoundment of the dam is completed.

Belaga assemblyman Liwan Lagang told The Star yesterday that the river transportation woes that started in early October last year was expected to be over by June, after nine months of disruption.

“By next month, the flooding of the entire Bakun Dam reservoir is expected to be completed. The water from the dam will then flow down into the Rajang River (after passing through the power generation turbines) and this will raise the river level along the downstream stretch from Bakun to Belaga down and on to Sibu,” he said when asked yesterday on the latest development in the Bakun Dam downstream area.

Difficult to move: Villagers walking on the exposed banks after the Bakun Dam’s impoundment which caused the upper reaches of the Rajang River in Belaga District to become shallow and dangerous in some parts in this file pic.

“Travellers using boats, including the big express boats, will then be able to navigate to the upper reaches of the Rajang River, as well as the Belaga and Balui rivers again,” he said, adding, “There should be no more interruptions to river travel, even during the coming dry season.”

Last October 14, the Balui River, which fed the Rajang River, was dammed up to enable the Bakun Dam reservoir to be flooded.

The dam reservoir has to be flooded to at least 195 metres high in order for the water to be able to run down the water inlet to generate the eight power-generation turbines to churn out 2,400 MWs of electricity.

After the impoundment of the Bakun Dam started, two major environmental disasters hit the Rajang River — a massive logjam stretching 50km that swept thousands of logs into the Sibu rivermouth and then the entire river experienced a drop in water-level, resulting in some stretches drying up completely.

The logjam was cleared after about a week, but the river transportation to the upper reaches of the Rajang, Balui and Belaga rivers continued to remain problematic until now.

In some parts of the river, the volume had dropped by up to six metres.

The Balui and Belaga rivers confluence into the Rajang River and then flow 400km passing through Belaga town, Song Bazaar, Kapit town and then Sibu town before reaching the South China Sea.

Liwan yesterday said the information he gathered from the Bakun Dam site was that the water volume to be released downstream of the main dam wall would drastically increase and would be in time to mitigate the effect of coming dry season on the water level in the Rajang River.

“In fact, the water level is already rising because the amount of water flowing down from the diversion tunnel outlet is quite heavy since there is already a lot of water in the Bakun reservoir behind the main dam wall.

“For passengers using small longboats, they can reach up to Punan Bah settlement already.

“Once the Rajang River volume increases more, big speedboats and cargo tugboats will be able to go up into the deep interior as well,” he said.

Asked about the land linkage problem faced by more than 1,000 Penans in the Lusong Laku settlement deep in the interior near the Sarawak-Kalimantan border after a rickety bridge built by a timber company was washed away by floods last February, he said the Federal Government was to build a Bailey bridge there soon.

“The army was supposed to build the Bailey bridge. Last month, they were supposed to go in and get things done, but had to postpone their task because of the state elections.

“They are going in soon, but I have not been told of any deadline for them to complete the bridge.”

Source: The Star Online

URL: http://thestar.com.my/metro/story.asp?sec=sarawak&file=/2011/5/2/sarawak/8590984

SEB to buy 30% of Bakun Dam for RM1.3bil?

20 April 2011

By YAP LENG KUEN
lengkuen@thestar.com.my

PETALING JAYA: Sarawak Energy Bhd (SEB), the state utility company, is believed to have proposed to acquire a 30% stake in the Bakun Hydroelectric Power project for RM1.3bil cash, sources said. The payment would likely be in the form of equity of RM700mil and a shareholders' loan of RM650mil, the sources added.

Based on its latest offer of a starting tariff of six sen per kwh, SEB is said to be working on a valuation of RM6bil for the Bakun Dam project compared with the cost of construction of RM7.46bil.

It is learnt that Sarawak Hidro Sdn Bhd, the owner and developer of Bakun Dam, finds the offer too low and is looking closer to seven sen per kwh, which will value the project at about RM8bil.

Sarawak Hidro's valuation is in line with the findings of a recent study by PwC, believed to be commissioned by the Finance Ministry (MOF), which valued Bakun at between RM8bil and RM10bil, sources said.

The Bakun Dam early this year

“Therefore, at SEB's valuation of RM6bil, it is believed that the valuation of Bakun will go down below its debt of RM5.75bil,'' the sources added.

“The MOF, which owns Sarawak Hidro, is handling these negotiations,'' said a source. “They will probably be working closely with SEB to find a mutually acceptable solution.''

The offer of six sen per kwh took into account a one sen water tariff the dam owner is obliged to pay to the state, sources said, adding that while asking for concessions from the Federal Government, the state should consider giving some leeway in terms of land charges and water levies.

Sarawak Hidro's price tag of RM7.46bil includes a RM950mil compensation to Ekran Bhd, the previous developer that could not complete the job, and RM500mil in resettlement costs.

Late last year, SEB had offered RM6bil to buy over the entire dam project. The MOF is believed to have cautioned that a sale of the mammoth project at below cost would be subject to scrutiny from the Public Accounts Committee.

Subsequently, SEB increased its offer to RM7bil with the following conditions:

The debt of RM5.75bil must be guaranteed by the Federal Government;

The equity portion of RM1.25bil would be paid over two years; however, there were no other details on this;

SEB wanted immediate control of the dam; and

The Federal Government must indemnify any potential cost over-runs.

Earlier talks had centred around possibilities of paying tariffs at flat and escalating rates; however, the parties could not come to any agreement.

This tussle involving ownership and power tariffs at the Bakun Dam has received the attention of top government officials.

It is believed to be in the agenda chaired by the Prime Minister at the oil, gas and energy committee under the Performance Management and Delivery Unit (Pemandu).

Sources said the talks were likely to last a few more months. “Both parties need each other badly,'' said a source, adding that they just needed to hammer out an acceptable solution for all.

The 2,400MW Bakun Dam is ready to supply 300MW in about three months' time, while SEB has signed term sheets with four companies Press Metal Bhd, OM Materials, Asia Minerals Ltd and Tokuyama Corp for supply of 1,300MW for their upcoming plants.

Source: The Star Online
URL: http://biz.thestar.com.my/news/story.asp?file=/2011/4/20/business/8514165&sec=business

Bakun hydro project to be joint venture

By JACK WONG
jackwong@thestar.com.my

13 April 2011

KUCHING: The Bakun hydro dam, which is expected to produce its first 300MW in three months, will become a joint venture between the Federal and Sarawak governments, said Chief Minister Tan Sri Abdul Taib Mahmud.

He did not, however, reveal what would be Sarawak government's stake in the dam, which could produce up to 2,400MW when fully operational.

The dam is now owned by the Federal Government through Finance Minister Inc.

The Sarawak government has offered to take over the dam's ownership for RM7bil after the Federal Government agreed to sell it last year as the plan to transmit the electricity to the peninsula via underwater submarine cables was scrapped.

From left: Tan Sri Abdul Taib Mahmud, Tokuyama vice-president Toshiki Nakamura, Press Metal chairman Datuk Paul Koon, State Planning Unit director Datuk Ismawi Ismuni and State Secretary Datuk Amar Mohammad Morshidi Abdul Ghani after the signing.

“The Prime Minister has assured me and the state government that all the Bakun power will be given to industries in Sarawak,'' Taib said at the signing of power purchase agreement (PPA) term sheet between state-owned Sarawak Energy Bhd (SEB) and four major investors in energy-intensive industries in Samalaju Industrial Park in Sarawak Corridor of Renewable Energy (Score) here yesterday.

The four investors were Press Metal Bhd, Japan's Tokuyama Corp, Hong Kong-based Asia Minerals Ltd and Singapore's OM Materials, which is listed on the Australian Stock Exchange.

Press Metal will set up a new aluminium smelter while Asia Minerals and OM Materials will each invest in a manganese smelter. Tokuyama's plant will produce polycrystalline silicon for solar panels.

Taib said the 944MW Murum dam project, now under development by SEB, would be operational in 2014, and that more dams would be built.

“For the (proposed) Baram and Pelagus dam projects, all the technical studies have been done. The Baram dam project will be a joint venture with Brunei.

“We (Sarawak) will have 6,000MW to 7,000MW (hydro power) by 2020,” he added.

The proposed Baram dam in northern Sarawak is expected to generate about 1,000MW while the Pelagus dam in the upper reaches of the Rejang River basin, where the Bakun and Murum dams are located, will generate about 900MW.

SEB, which has plans to develop several smaller dams, will export electricity to Brunei and Sabah.

Taib said the state had some 500,000 coal resources which could be exploited to produce electricity.

Source: The Star Online

URL: http://biz.thestar.com.my/news/story.asp?sec=business&file=/2011/4/13/business/8468803

Tariff deal to materialise soon for S’wak Hidro, S’wak Energy

4 May 2011

KUCHING: Recent news flow on the power tariff negotiations between Sarawak Hidro Sdn Bhd (Sarawak Hidro) and Sarawak Energy Bhd (Sarawak Energy) has been positive – implying that a deal could be on the cards soon.

According to a report, a power purchase agreement (PPA) between both parties would likely be signed in two months.

Both federal and state governments were believed to have reached a pact on tariffs for power off-take from the Bakun damn earlier last week.

It was likely to be between Sarawak Energy’s starting rates of six sen per kilowatt hour (KwH) and seven sen per KwH as requested by Sarawak Hidro, the owner and developer of Bakun dam. By extension, this would place the valuation of the RM7.5 billion Bakun dam to be somewhere between RM6 billion and RM8 billion.

At seven sen per KwH, Sarawak Hidro’s valuation was in line with the findings of a recent study by PriceWaterhouseCoopers – which valued Bakun at between RM8 billion and RM10 billion.

It was also reported last month that Sarawak Energy had proposed to take up a 30 per cent stake in the Bakun project for RM1.3 billion, RM700 million of which would likely be via equity injection and the balance RM650 million coming from shareholders’ loan. By extension, this implied a valuation of RM6 billion based on a Sarawak Energy’s offer of six sen per KwH.

Furthermore, AmResearch Sdn Bhd (AmResearch) gathered the 2,400 megawatt (MW)-Bakun dam was ready to supply its first 300MW of power by July.

“Sarawak Energy has moved quickly to sign PPA term sheets with four companies – Press Metal Bhd (Press Metal), OM Materials, Asia Minerals Ltd and Tokuyama Corp. These first batches of companies are expected to consume a combined 1,300MW for their respective plants, to be located at Samalaju Industrial Park in Bintulu.

“This was quickly followed by an agreement between Gulf International Investment Group Holdings Sdn Bhd and Aluminium Corp of China to set up an US$1.5 billion aluminium smelter in Similajau. The smelter is expected to take up 600MW of power initially based on a production capacity of 370,000 tonnes,” stated AmResearch in its sectoral update report.

The research house’s ground checks indicated that Sarawak Aluminium Smelting Sdn Bhd – a joint-venture between Rio Tinto Alcan and the Cahya Mata Sarawak group – could be a third player to set up an aluminium smelter in Similajau.

“The smelter is expected to consume between 900MW and 1,200MW of power against an annual capacity of up to 720,000 tonnes,” said AmResearch.

The research house continued to favour Press Metal as an early beneficiary of crystallisation of long-term power supply with Sarawak Energy. To be sure, the group is currently the only direct play on the commissioning of Bakun dam.

AmResearch pointed out that Press Metal’s recent capital raising manoeuvres positioned the group to embark on Phase Two of its expansion programme that could potentially triple capacity to 360,000 tonnes by end-2012.

Source: Borneo Post Online

URL: http://www.theborneopost.com/?p=127687