Many large companies involved in minerals and mining operations have come knocking on the doors of Sarawak Hidro Sdn Bhd, the Ministry of Finance Incorporated-owned company developing the Bakun hydro-electric dam, to enquire about cheap power.

These companies, including BHP Billiton (BHP) and Rio Tinto of Australia - a Dubai-based group and a Sino-Malaysian joint venture - are potential buyers of large quantities of power to be generated by the 2400-MW Bakun dam which is expected to be operational in 2009, two years behind its original scheduled date of completion.

After some hiccups at the initial stage in the civil and engineering works, awarded to a Sino-Malaysia consortium originally led by Sime Engineering Sdn Bhd, project management responsibilities changed hands from Sime Engineering to China Hydro (Malaysia) Sdn Bhd, its Chinese partner, in January this year.

"Work is going on well now," a Sarawak Hidro official told malaysiakini today. "There is a lot of catching up with the accumulated delays prior to the project management change. It's picking up speed."

According to sources, the Chinese partner, who holds a 30 percent stake in the seven-member consortium, has asked the developer to push the date of completion by two years, without any penalty, and it is understood that the request is still being considered.

It is learnt that the consortium has requested for a variation of the contract price by about RM700 million, pushing the cost of the civil and engineering works to about RM2.5 billion.

A separate cost is the requirement for eight sets of 300-MW turbines costing in excess of RM1 billion, but the developer could opt to order all three but request suppliers to stagger delivery over a longer period to save initial capital expenditure, depending on requirements for the power.

A cheap dam

As the existing power utility company Sarawak Electricity Supply Corporation (Sesco) has more than enough capacity to supply the state's consumer needs over the next five to 10 years, the power generated by Bakun will have to be taken up by new large consumers.

According to officials familiar with power generation in the state, Bakun will be one of the cheapest hydro-electric dams in the world.

For this reason, it has attracted a lot of interest from the large international companies who are eyeing to invest in the proposed multi-billion-ringgit smelter plant in Similajau, Bintulu.

According to the officials, the prospective foreign investors who have approached the government to express their interest to invest in the smelter plant have requested for a tariff of 0.2 to 0.25 US cents (8 to10 sen ) per kilowatt/hr. The power consumption for the proposed smelter plant could be at least in the region of 1000MW.

"With the volume requirement and the cost to build the hydro dam, we figure it is possible to fix the selling price around that figure, or slightly more, which is still much less than what even industrial users currently pay in Sarawak," they said.

Sources said although Malaysian businessman Syed Mokhtar Albukary is no longer involved in Sarawak Hidro Sdn Bhd, his original proposal to invest in the smelter plant with a group from Dubai 'is still very much on'.

Cost next to nothing

The latest news about the interest of Australia's Rio Tinto, one of the world's largest companies in mining operations, to invest in the smelter plant in Bintulu has generated some surprise locally.

Although the company has yet to make any official statement, sources said it should come as of little surprise as "many people have come knocking on the doors of Sarawak Hidro".

Talk of an aluminium smelting plant in Bintulu was first heard in the late1970s when the possibility of a large hydro-dam to be built in central Sarawak was discussed.

Because the hydro dam project had been on and off a couple of times until it finally got off the ground four years ago, nothing of the smelter plant project was heard again until not long ago.

"Without a large hydro dam nearby there can be no smelter plant in view of the large amount of cheap electricity needed," officials said.

"Compared wth rising oil prices and the high maintenance cost of gas turbines, it almost costs next to nothing to generate hydro power," they added.

TONY THIEN is malaysiakini's Sarawak-based stringer.