Prime Minister Abdullah Ahmad Badawi today said the government would proceed with the huge Bakun hydroelectric dam in Sarawak but had not decided whether to privatise the project.

The government took over the controversial 2,400 megawatt Bakun scheme and revived it in 2001 after it was shelved during the 1997-1998 Asian financial crisis when the main operator fell into debt.

Tycoon Syed Mokhtar Albukhary has made a bid for the project, with his GIIG Capital signing an agreement in August to buy a 60 percent stake in dam operator Sarawak Hidro from the Minister of Finance Inc. for RM945.42 million.

The tycoon's move is aimed at ensuring power supply to a two-billion-dollar aluminum smelter to be developed by GIIG in Sarawak by 2007. GIIG is jointly owned by Syed Mokhtar and Dubai-based Mohamed Ali Alabbar.

But sources told The Edge weekly newspaper that the agreement had lapsed because GIIG failed to fulfill certain conditions by an Oct 15 deadline and the government was having "second thoughts" about selling Sarawak Hidro.

Detailed report

Abdullah, who is also finance minister, confirmed the government was "not sure yet" whether it would keep control of the mammoth project.

"We still want to go ahead with the Bakun project. We don't want to abandon it. The approach we will take has yet to be decided as our officers are still looking at various aspects of the project," he told reporters.

On plans to sell Sarawak Hidro, he said there has been "no decision yet" and he was waiting for more detailed reports.

"The project must go on but there are some details with regards to the implementation of the project that I'd like to see and to know more about," he added.

Today's Business Times quoted GIIG co-owner Mohamad Ali as saying the company has satisfied all the conditions required and the sale of Sarawak Hidro was on track.

"Everything is moving as scheduled. I am happy with the progress," he told the daily.

New proposals

But the Edge said it learned other companies had submitted new project proposals to the government.

These included a joint-venture between Malaysian Resources Corp and Sweden's Asea Brown Boveri, which proposed reviving plans to build 1,600 megawatt submarine cables at a cost of RM9.1 million to transfer power to peninsular Malaysia, it said.

Malaysia dropped plans for the world's longest undersea cable network to cut costs after it revived the project.

The total project cost is unclear at this stage, with reports citing nine billion ringgit at the time of its revival but The Edge pegged it at only RM4.5 million.

The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism for its likely effect on the environment and some 10,000 locals who have already been moved out of their homes. Environmentalists say the dam's capacity far exceeds future power needs in Sarawak.