Sarawak Bakun Dam

Some of you might not heard of Bakun Dam before. For your information, it is actually one of the largest hydroelectric dam in the world. The federal government has recently decided to sell its stake to back to Sarawak. This dam has a surface area of 690 km square which is slightly bigger than Singapore (630 km square).

Location of Bakun Dam. Sungai Balui which is a tributary source of Rajang river (Longest river in Sarawak)

An aerial view of Bakun Dam.

KUALA LUMPUR: The Federal Government will negotiate with the Sarawak Government to come up with a "reasonable price" over the state's bid to buy the Bakun hydroelectric dam for RM6 billion.

Deputy Prime Minister Tan Sri Muhyiddin Yassin confirmed the Federal Government would sell the nation's largest hydroelectric dam to the Sarawak government.

He said on Monday, Sept 27 the Federal Government was working out the details for the transaction including the finalisaiton of the price and method of payment.

"In principle, the (federal) government has already agreed (with the sale) as was announced by Datuk Seri Peter Chin," he said.

He was speaking to reporters after delivering the keynote address at the World Capital Markets Symposium 2010.

Last Friday, Chin, who is Minister for Energy, Green TECHNOLOGY [] and Water said both governments would begin negotiations on pricing terms for the deal.

"It is normal for people to make a lower offer when they want to buy something. But I believe when the deal will be finalised at a reasonable price that will be agreed by both parties," said Muhyiddin when asked to comment on purported higher offers by other parties bidding for the hydroelectric dam in Belaga, Sarawak.

Recently, Chief Minister Tan Sri Abdul Taib Mahmud was reported said the state may even consider offering up to RM7 billion under certain conditions.

*News updated by The Edge Malaysia. on 27th September 2010.

History of Bakun Dam

Bakun Dam is expected to generate 2,400 megawatts (MW) of electricity once completed. The purpose for the dam was to meet growing demand for electricity especially for Peninsular Malaysia. However, the dam is located in East Malaysia (Sarawak), therefore the original plan was to build an undersea cable to sent 70% of the electricity generated from this dam to Peninsular Malaysia.

This giant hyrdroelectric dam is not something new. This project was actually proposed and studied in the early 1960s. It was first approved by the government in 1986 but was then shelved in 1990 due to decreased projection of electricity demand due to the economic recession of 1986 and 1987.

In 1993, the Prime Minister then Mahathir Mohammad revived the idea. In January 1994, he awarded the privatized contract to Ekran Berhad which is controlled by a business man, Ting Pek Khing. Ting had impressed Mahathir with his construction projects in Langkawi Island. It was an unfair bid since the project was not tendered publicly and also, Ting Pek Khing himself a timber tycoon with no experience in building a dam before was award a biggest project of the century. Of course, this project turned out to be failure under him. In 1997, due to the financial crisis, the project was halted. By then more than RM 1.6 billion had already been paid out by the government.

In 2000, the project was again revived through a government owned company, Sarawak Hidro. Part of the construction project was tendered out to Sime Engineering Berhand (A subsidiary of Sime Darby and Sino-Hydro Corporation of China). It was estimated be completed by 2008. However, due to various reasons and cost overrun, the project has been delayed, and it was estimated that this project had cost the government at least RM 7 billion plus interest.

Now that the Federal government have decided to sell its stake to Sarawak Energy, part of the electricity generate will definitely be used to support the upcoming Aluminium smelter in Similajau near Bintulu.