Work on the Bakun hydro-electric dam now being constructed on the Balui river in central Sarawak seems to be progressing well, a welcome change from its problematic past.

The dam is, for the moment, the largest in Asia outside of China, and will generate 2400 megawatts (MW) of electricity.

The financial cost has been greatly reduced from its original planning which included an undersea transmission line across the South China Sea linking Sarawak to the southern tip of Johor in Peninsular Malaysia.

The latest figure quoted is RM5.8 billion, which possibly includes legacy costs incurred under a previous contractor who failed to carry on at the onset of the mid-1997 Asian economic crisis.

This figure also includes RM1.8 billion contract sum for the main civil works contract awarded in October 2002 to Malaysia-China Hydro Joint Venture (MCHJV), a Sime Engineering Services Berhad-led seven-member consortium.

Early this month, MCHJV has completed a little more than 10 percent of the work, and is trying to catch up with lost time after taking possession of the site towards the end of 2002 to finish the project on schedule by September 2007.

A recent site visit reveals that much of the work on the foundation base for the dam has been completed, and blasting work for the construction of the rockfill is underway. What will emerge from the main worksite is a 205-metre-high concrete-faced rockfill dam with a length of 740 metres.

10 months of impounding

Once this is completed, possibly by the end of 2006 or early 2007, the two river diversion tunnels will be closed and the impounding will commence to bring the water level gradually up to 205 metres.

Based on expert studies, the impounding will take at least 10 months. The Kenyir Dam is said to have taken two years to bring the water up to the required level.

Above the dam, a large area of some 14,000 sq km or equivalent to the size of Singapore, will be flooded to act as a reservoir.

It is from this reservoir that the water will flow through controlled gates to run eight turbines with a generating capacity of 300MW each.

According to a MCHJV official, construction work will peak in a year's time when both machinery and workforce will increase substantially. From the present 1,400, including about 300 Chinese workers, the workforce will increase to between 3,500 and 4,000.

Sime Engineering managing director Jafar Carrim, when speaking to journalists visiting the site recently, would not say what percentage of the workforce would be foreign.

But he said the company is making conscientious efforts to train locals in conjunction with the Construction Industry Development Board (CIDB) on various technical skills required for the jobs.

"We will first take them in as job apprentices before they are assigned to handle machines and other works," he said.

May cost more

Malaysiakini understands that Sarawak Hidro Sdn Bhd, the Ministry of Finance Incorporated wholly-owned company that is developing and financing the construction of the dam, will have to raise financing through government bonds for the project which could cost more than RM5.8 billion, in view of rising costs of materials, especially cement and steel.

MCHJV has already put in a claim for RM181 million for the 11 percent work done, and is expected to ask for what amounts to a contract price variation because of the recent increase in steel prices as well as other materials.

"You can't hedge when it's government-controlled price. You can therefore put a claim against that sort of thing," one MCHJV official said.

The big question is where is so much power going to go when the dam is completed in four years' time?

Sarawak's own power demand now stands at about 600MW and there is excess capacity with the local utility company's plant expansion going on.

There has been talk in the last year or so of a billion-ringgit aluminium smelter plant to be set up in Similajau, Bintulu, which is about 180km inland to Bakun. But this particular deal involving a Malaysian corporate leader and a Dubai investor is now uncertain.

The government had initially planned to sell 60 percent of Sarawak Hidro to GIIG Capital, which is controlled by tycoon Syed Mokhtar Albukhary and Dubai-based Mohamed Ali Alabbar but early this year the government announced that the deal will not proceed.

Prime Minister Abdullah Ahmad Badawi, who is also finance minister, said that an agreement signed on Aug 30 between the finance ministry, Sarawak Hidro and GIIG Capital has lapsed because some conditions under the pact were not met within the stipulated timeframe.

GIIG had wanted to gain control of the project to ensure power supply for a two-billion-dollar aluminium smelter it wants to develop by 2007

Sarawak Hidro officials now say the government is talking to several parties keen on setting up energy-intensive industries in Sarawak. The government is expected to make a major announcement on this soon.

If a smelter plant takes off ( it depends on when the deal is concluded and how soon work can start), then at least 50 percent of the power from Bakun is already pre-booked, leaving the rest to be fed into the state's own grid (which, according to engineers, needs to be upgraded from its 275MW load capacity) and to Sabah which could absorb some 600MW for future needs.

TBPG Interconnection

A more ambitious plan of the government is to hope to feed some of the power from Bakun into what has been described as the Trans-Borneo Power Grid (TBPG) Interconnection which is a Borneo grid linking Sarawak, Indonesian Kalimantan, Brunei and Sabah.

Although Asean government officials and industry people have been talking about it, they understand at the same time the practical difficulties involved. Even when Sarawak's existing 300MW Batang Ai Hydro Dam, built at a cost of RM600 million in the 70s, is so close to the West Kalimantan border, the interconnection concept after all these years of talking remains very much on the planning board.

Government officials say the undersea transmission link between Sarawak-Johor remains an option, inspite of the unknown technology and the mind-boggling financial cost. One industry expert says the undersea cable will cost at least RM9 billion or almost twice the cost of Bakun Dam itself.

Unless the cost is shared among Asean countries that are going to benefit from shared power generation, it is unlikely the Malaysian government will consider it, much less the budget-conscious Prime Minister Abdullah Ahmad Badawi.

Alternatively, if there are no immediate takers within the next four years of Bakun power, it is likely that Sarawak Hidro will phase out the installation of the turbines initially.