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Thursday, May 5, 2011
SEB to buy 30% of Bakun Dam for RM1.3bil?
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.
“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 OnlineURL: 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.

“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
Monday, July 19, 2010
SCANE: Amend the Sarawak Natural Resources & Environment Ordinance
SCANE opines that it is time for the state government to review and amend the NREO 1994 to provide transparency in the EIA processes that requires public participation and scrutiny prior to EIA approval as well as strengthening environmental measures by incorporating the Social and Environmental Impact Assessment (SEIA), the Equator Principle and the United Nations Declaration on the Rights of the Indigenous Peoples.
As it is now, the authority of the EIA approval for certain projects in Sarawak is the Natural Resources and Environment Board (NREB) which is subject to the NREO 1994.
Unlike the Federal Environmental Quality Act 1974 (EQA), the NREO 1994 excludes public participation in the EIA process, unless the project proponent so desires. The nature of the EIA process in Sarawak is non-transparent and contrary to good governance, as there is no right given to the public to scrutinize and give feedback prior to EIA approvals. As a result of this exclusion, there were several shortcomings in the EIA approvals in Sarawak.
SCANE has found several shortcomings and flaws in the EIA processes and reports since the NREO 1994 came into force in 1995. There had been numerous of development projects related to forestry, plantations and dams where EIA have being conducted were approved without the knowledge of the public. The public at large is still in the dark as to how the EIA reports of these projects were approved in the first place. Even the approval of EIA for highly controversial projects such as hydro-power dams remain shrouded in mystery, despite of public outcry.
SCANE has also noticed that certain development projects that involve government-link corporations and certain private companies have started their activities ahead of the approval of the EIAs. In the case of the Murum hydropower dam project, the works have started about 10 months prior to EIA approval.
SCANE is also extremely shocked to learn that the Social and Environmental Impact Assessment (SIEA) studies for Murum hydropower dam has yet to be completed and approved by the NREB.
The EIA process and practices are clearly a mockery of the NREO, since they are approved despite suffering from serious flaws. As a result, public perception of the NREO is that its job is none other than to legalise stitched up jobs and the collusion of project proponents and the appointed EIA consultants in order to get the EIA approval of out of the way.
SCANE has also noticed that the EIA process under the NREO 1994 is only procedural and meant to pave the ways for the implementation of development projects. In most cases, it seems to serve merely to comply the requirements of the project proponents and their financiers.
SCANE therefore calls for the Sarawak government to amend the NREO 1994 for the sake of transparency and pave the way for free, prior and informed consent in the exercise and enforcement of the laws pertaining to the conservation and management of the environment in the state.
SCANE trusts that amending the NREO 1994 is the only way forward if the Sarawak government is serious about achieving sustainable development and putting in place sound environmental management policy to deal with our sensitive ecosystems.
Monday, May 24, 2010
Sarawak natives fear threat of palm oil estates
FRI, 21 MAY 2010 20:05 By Anil Netto - FMT
GEORGE TOWN: A increasing number of natives in Sarawak state in north Borneo are alarmed at encroaching forest and oil palm plantations, which are taking over their native customary land and destroying their traditional lifestyles and biodiversity.
In Long Terawan, a village in the north of the state, a community of a thousand Berawan and Tering indigenous people who live in longhouses is worried about plans by a reforestation and plantation group to take over 80,000 hectares of native land. And there are other villages and communities similarly affected. "The land is being given to the big companies to do the plantations in our area," says Dennis Along, a villager who comes from a traditional farming family. "In future, it will be very hard for the longhouse people to do farming. There is no free land for us to do farming any more, because the company is taking over the land."
The villagers here used to cultivate paddy, plant rubber trees and grow a variety of local fruit trees — as part of a shifting cultivation tradition that goes back hundreds of years. "We move to a new area every year because we want to make the ground more fertile," explains Along.
"When we move our rice fields, we plant fruit trees — rambutan, durian, langsat, jackfruit — to help replenish the soil." Their land is also home to wildlife such as wild boar, monkeys, deer and all kinds of local fish varieties.
Now, they are going to lose all that as plantation companies have taken over their land, laments Along.
Similar large forest plantation projects are slated for the Kakus and Belaga regions.
The loss of biodiversity when land is cleared for plantations is alarming. "When a huge area is cleared for plantations, all the plants will be cleared, because they are clearing up the land," explains Raymond Abin, coordinator of the Sarawak Conservation Action Network, which consists of environmental and indigenous rights groups in Sarawak.
"After that, they will do the excavating work in order for them to plant the oil palm. This will invariably lead to serious soil erosion that would flow into the streams and rivers and kill a lot of fish.
"In addition, foreign workers hired by the plantation firms are often concerned about their own survival and extract as much fish from the rivers as they can. "There will be little wildlife once the forest is gone and replaced by tree or oil palm plantation," says Abin.
The immediate impact on surrounding communities is water pollution and flash floods.
In Sarawak, forest plantations are mainly of fast maturing tree species such as acacia mangium and rubberwood (timber latex clones). Acacia mangium is a highly invasive species regarded as a threat to natural forests and the natural environment.
Forest plantations too
Whatever the condition of the existing forest, planting fast-growing acacia involves prior clear-felling and removal of stumps, resulting in a denuded landscape ready for replanting. It is also a sterile monocrop that allows little to grow beneath it. Acacia plantations thus cannot support the rainforests' original faunal diversity.
The ‘Global Biodiversity Outlook 3’ report released by the Secretariat of the Convention on Biological Diversity — an international treaty adopted in Rio de Janeiro in June 1992 — earlier this month noted that the 2010 biodiversity target agreed to by the world's governments in 2002 has not been met at the global level.
"The loss of biodiversity is an issue of profound concern for its own sake. Biodiversity also underpins the functioning of ecosystems, which provide a wide range of services to human societies. Its continued loss, therefore, has major implications for current and future human well-being," the report said.
According to the website of the Malaysian Timber Industry Board, the Plantation Industries Ministry aims to develop 375,000 hectares of forest plantation for timber at an annual planting rate of 25,000 hectares per year for the next 15 years.
This is part of an aggressive programme that includes providing soft loans to companies for the development of such plantations "to reduce pressure on native forest as a source for raw materials and to ensure its continuous availability for the domestic timber industry." Sarawak also plans to double its oil palm coverage to one million hectares by this year.
The loss of biodiversity in tree plantations in Sarawak is significant in the global equation, says political economist Andrew Aeria. "But don't expect Sarawak politicians to be bothered by all this. All they are interested in is the profit margin of their crony companies and their family-linked companies involved in tree plantation projects."
Meanwhile, the villagers in Long Terawan are still engaged in farming using their traditional practices & dash; but for how much longer?
"When the plantations come — and they are starting work now..." Along’s voice trails off. "Now they are doing work in the jungle, and after the jungle, the native customary land, and after that, the whole place, and definitely our farms will go."
The Baram natives concerns not only on above issue, but they are also fear a repeat of Bakun fiasco as the government had been proposed to build another hydro power in upper Baram.
The residents voiced concerns of their fate once the dam is built. They are wondering what will happen to their land once its waters inundate their villages… how are they going to be resettled and how much it will cost them. Baram peoples should look at Bakun case as a lesson learnt. Probably it is time for them to say good bye to the government that seems to be not sensitive to their peoples concerned.
Wednesday, March 3, 2010
Greenwashing Hydropower
Big dams have a serious record of social and environmental destruction, and there are many alternatives. So why are they still being built?
On a hot May day, a peasant farmer named Bounsouk looks out across the vast expanse of water before him, the 450-square-kilometer reservoir behind the new Nam Theun 2 dam in Laos. At the bottom of the reservoir is the land where he once lived, grew rice, grazed buffalo, and collected forest fruits, berries, and medicinal plants and spices. Now there is just water, water everywhere.
"Before the flood I could grow enough rice to feed my family and I had 10 buffalo," he says. "I like our new houses and I like having electricity in the new village, but we do not have enough land and the soil quality is very poor. Now I can't grow enough rice to feed my family, and three of my buffalo died because they didn't have enough food."
Bounsouk is one of 6,200 indigenous people whose lands were flooded to make way for the Nam Theun 2 Hydropower Project in this small Southeast Asian country. His story is one that is heard over and over again in the project resettlement area. People are generally happy with their new houses, electricity, and proximity to the road, but are concerned about how they will feed their families in the long term. The poor quality of land and lack of viable income-generating options in this remote area make their prospects bleak.
Big dams have frequently imposed high social and environmental costs and longterm economic tradeoffs, such as lost fisheries and tourism potential and flooded agricultural and forest land. According to the independent World Commission on Dams, most projects have failed to compensate affected people for their losses and adequately mitigate environmental impacts. Local people have rarely had a meaningful say in whether or how a dam is implemented, or received their fair share of project benefits.
Read more at: http://www.worldwatch.org/node/6344
Source: Worldwatch Institute