Putrajaya won’t sell Bakun to Sarawak, only the power

Posted on May 31, 2011. Filed under: Energy |

-The Malaysian Insider-
By Jahabar Sadiq
Editor
May 31, 2011

The Bakun Dam under construction. — Picture courtesy of http://www.bakundam.com

KUALA LUMPUR, May 31 — The Najib administration has decided not to sell the Bakun Dam to Sarawak but will sign a power purchase agreement (PPA) with the state on Hari Gawai tomorrow, giving Putrajaya an energy option for Peninsular Malaysia when costs rise further in the future.

The Malaysian Insider understands the decision was made after the April 16 Sarawak election when Tan Sri Abdul Taib Mahmud swept to victory but did not give a date to step down as chief minister, much to the dismay of Barisan Nasional (BN) leaders across the South China Sea who feel new blood is needed in the Land of the Hornbills.

“Putrajaya has decided to keep Bakun but sell the power to Sarawak first before deciding other options,” a source told The Malaysian Insider.

The government announced yesterday a 7.12 per cent hike in electricity rates from June 1 by Tenaga Nasional Berhad (TNB) in an effort to trim its burgeoning subsidy bill, but promised the hike will not affect some 75 per cent of domestic consumers. Power prices will now rise by as much as 2.3 sen per kilowatt hour.

Officials said natural gas prices would also rise by RM3 per mmBtu each six months until it reached market levels. The government said it will still spend some RM25 billion to subsidise the gas bill this year.

It is learnt the government is still eyeing the original plan to bring electricity via undersea cables from the Bakun Dam to the Malay peninsula but current costs and energy losses would not make it feasible at this point in time.

Taib (picture) announced last week that the state’s Sarawak Energy Berhad (SEB) will buy power at an attractive rate from Bakun owner Sarawak Hidro Sdn Bhd, a unit of the Ministry of Finance Incorporated.

However, the state’s longest-serving chief minister did not disclose the cost and when asked whether the electricity generated by Bakun Dam would be sold at six sen per kilowatt hour, he replied: “You want me to say something before the ceremony?”

Public Utilities Minister Datuk Amar Awang Tengah Ali Hassan said the state government was imposing some amount as water levy on Sarawak Hidro annually.

“The levy for water to generate electricity has to be charged but I am not sure how much. It was in the licence before. That is one of the conditions when we issued the licence for Bakun,” he said, adding the levy would continue even after the Bakun Dam begins operation this July.

Last September, Taib said the state government had placed a bid of over RM6 billion to buy over the Bakun project from Putrajaya despite the dam’s entire bill rising above RM7.3 billion since the project began in 1994.

“The bid is flexible in the sense that if the method of payment can be made lighter we can increase a bit more, but there is limit to what we can pay,” he had said.

The Sarawak government wanted the dam due to its confidence of higher power uptake from the Sarawak Corridor of Renewable Energy (Score), which is initially projected at 500 MW in 2012, will rise to about 2,600 MW by 2015.

Currently, Sarawak’s capacity to generate electricity is at 1,300 MW, which exceeds the peak demand of 1,100 MW.

The Bakun Dam at the Balui River in the upper Rejang River basin and 37km upstream from Belaga and is the world’s second-tallest concrete rock-filled dam. When all the eight turbines become fully operational, it will be able to generate up to 2,400 megawatts of electricity.

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