By YAP LENG KUENPETALING 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.
“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