News that the federal government is likely to shelve its plan to divest 60 percent of its equity in Sarawak Hidro Sdn Bhd, the developer of the multi-billion hydro-electric dam project in Bakun, has been quietly welcomed by parties closely identified with construction.

Some of those connected with the successful Sime Darby-led consortium - which has been awarded the RM1.4 billion project - appeared delighted at the sudden turn of events when contacted by malaysiakini.

Sarawak newspapers today reported that the government is having second thoughts about its plan, following the failure of a Syed Mokhtar Albukary-linked company to meet certain conditions by Oct 15.

The local partner in the consortium is Edward & Sons Sdn Bhd, which has a 5% stake in the contract job.

Although the production capacity of the dam remains at 2,400 megawatts, the cost after a review and re-tender has reportedly been reduced significantly to RM4.5 billion. The expensive undersea cable to transfer electricity to Peninsular Malaysia has been taken off.

Payment guaranteed

Syed Mokhtar's plan is to use half of the power from Bakun to supply a proposed RM7.6 billion smelter plant to be set up in Bintulu.

It is not known, however, whether he will still proceed if his company is not involved in Sarawak Hidro, a 100% Ministry of Finance-owned company.

According to sources in financial circles, it was only natural for any consortium to feel reassured if a project of such magnitude remained wholly under the government, as this would guarantee payment for work done.

"At times like this, we are less inclined to deal with uncertainties. The government provides a lot of certainty," one project participant said.

Meanwhile, work has already started on the project, with various jobs already defined for different parties. Workers are being recruited locally and abroad for the work, which will go on until 2007.

When completed, Bakun will be Malaysia's largest single hydro-electric dam. It will add a significant amount of power to the state's power grid, with the possibility of this being extended across the border to West Kalimantan, Indonesia.