MALAYSIA: Learning to Reckon With the Bakun Curse

By IPS Correspondents Reprint | | Print |

Anil Noel Netto

PENANG, Malaysia, Sep 14 1997 (IPS) - When you try to displace 10,000 natives so that you can bulldoze and flood ancestral lands and forests the size of Singapore, who knows what mysterious, powerful forces will be unleashed.

Nature’s backlash? Divine vengeance? Whatever it is, the 5 billion U.S. dollar project to build the Bakun hydroelectric dam in Malaysia’s Sarawak state seemed to have been jinxed right from the start.

The latest setback came on Sep 4 when Prime Minister Mahathir Mohamad announced that the 2,400-megawatt dam would have to be shelved. Bakun was among several megaprojects he said would have to be postponed to ease the pressure on the Malaysian economy. It was a personal blow for Mahathir who had staked much of his prestige in seeing the dam completed by 2002.

It was not a good day for Ekran Bhd, the dam’s project manager, either. Its affiliate, Bakun Hydroelectric Corp (BHC), announced it was dismissing the project’s main contractor, a consortium led by Swiss-Swedish engineering giant Asea Brown Boveri AG, or ABB.

Bakun Hydroelectric said both parties had failed to resolve a dispute on the terms of their contract signed last October. The contract with the consortium, which also includes a Brazilian construction firm, Cia. Brasileira Projectos & Obras, was for the dam’s engineering, procurement and construction work.

One of the points under dispute was which side should absorb cost overruns caused by delays in the project. “It is now clear after 10 months that the parties are so far apart on these points that an agreement is no longer possible,” BHC said in a statement.

The government was quick to distance itself from what was once considered a national project. “Why should the government cover the cost? It is a private sector business between two groups,” said energy minister Leo Moggie.

ABB’s sacking was a good opportunity for the government “to recognise the enormous problems involved in pushing ahead with the Bakun project,”, said Dr Kua Kia Soong, spokesman for a coalition of non-governmental organisations.

These problems include the dam’s impact on the economy, the environment and natives, he added. The project involves clearing 80,000 hectares of rainforest, home to rare plants and animals.

It has been rough sailing for Bakun right from the start. The government first announced the project in the 1980s, but later had to shelve it due to a biting recession then.

When it was revived in the 1990s, Sarawak natives took the issue to the High Court. In a landmark decision, which stunned political and business circles, the judge declared that the project had flouted federal environmental legislation.

Although the ill-fated project was saved following a successful court appeal, it continued to be plagued by problems. News of the project’s contract signing came amid concern over the health of Ekran head Ting Pek Khiing, who suffered a mild stroke then.

More mysterious forces wreaked havoc in the area near Bakun. In June, Sarawak was hit by a mysterious virus that killed several toddlers. No sooner had it recovered from that crisis when a severe haze shrouded the southern state. Its capital, Kuching, was among the worst affected cities in the country with the air pollution index hovering over the “unhealthy” zone.

Were these crises an omen for Ekran?

June brought bad news for the company, whose one-for-one rights issue to raise funds to help finance its 32 percent stake in BHC was coolly received by investors. Acceptance of the issue came to only 37.2 percent, a big chunk of which was taken up by Ting and his wife.

At the same time, the national news agency quoted the Sarawak Chief Minister Abdul Taib Mahmud as saying parts of a structure at the Bakun site had collapsed due to heavy rain.

The woes did not end there. BHC was expected to offer 25 percent of its shares to the public in August. But the poor response to Ekran’s rights issue and the weak stock market caused fears that the BHC listing would be undersubscribed. The stock listing, which sought to raise 2 billion dollars in two tranches, now appears to be indefinitely postponed.

That was not all. The first round of compensation payments to natives who are to be resettled hit a snag late last month. Fifteen leaders representing the affected natives returned cheques totaling 175,862 dollars only hours after receiving them, saying the amount handed out was less than what was previously agreed upon.

The native leaders did not know how officials had calculated the compensation, nor could they understand the disparities. “We feel that the disparity in compensation should not be treated lightly because the affected residents have more or less comparable sizes of properties,” a spokesman for the group, Cassidy Ajin, was quoted as saying.

The incident “highlights the shocking lack of accountability and transparency” surrounding the Bakun dam project, said federal opposition leader Lim Kit Siang.

Then came the economic scare that forced Mahathir to delay megaprojects, including Bakun, as concerns over Malaysia’s widening current account deficit and a weaker ringgit mounted.

For the NGO coalition, the delay was a small victory. It promptly urged the government “to seize the opportunity to do the right thing and cancel the Bakun project altogether”.

Malaysia would be better off, Kua said, if its “financial resources were better used towards building low cost housing, providing micro and small hydro electric projects for Sarawak’s indigenous communities, and providing schooling”.

Indeed, experts say Bakun is far from a national priority since Malaysia still has huge reserves of installed power generating capacity. And with more power plants being set up, it seems redundant for BHC to sell its electricity to Tenaga Nasional, the national supplier, at a rate higher than Tenaga’s own generating cost.

The full potential of Malaysia’s abundant gas reserves has also not yet been fully tapped, and major strides have been made in the development of solar energy.

But too much pride and profit is at stake for Bakun to be entirely abandoned. Ekran, which has no experience in building dams, has reportedly identified new partners to replace ABB. Taib Mahmud has said that the Sarawak government will proceed with resettling and compensating 1,936 affected native families despite the project’s delay.

Other related work not connected to the ABB contract, such as work on the diversion tunnel, is expected to proceed.

Malaysia’s gung-ho determination to complete the project may still be there, despite the blows so far. But those pushing vigorously for the project may find themselves up against an unfamiliar force: the curse of Bakun.