Malaysia’s politicians authorize a spate of dams they don’t appear to need

Lee Poh Onn
22 August 2008

Plans to build 12 new dams in Sarawak, allegedly to meet power demands for decades to come, have recently been uncovered despite the fact that the state has 20 percent more capacity than it needs now - before the controversial Bakun Dam comes online in 2011, bringing with it even more overcapacity.

When news of the projects became public, environmentalists were up in arms. The two existing dams in Sarawak, Batang Ai Dam completed and Bakun Dam nearing completion, were accompanied by a range of widely publicized socio-economic and environmental repercussions worrying enough for the anti-dam faction to exhibit public outrage.

The pro-dam faction, Sarawak's ruling polity, its electricity board, business conglomerates and businesspeople, see the benefits, given that Sarawak has major waterways and a river system that can be drawn into the process of producing hydroelectricity. They also say dams can provide a clean source of energy and, in addition, help Malaysia to diversify away from fossil fuels which in the past year have witnessed skyrocketing prices.

Dams are also regarded as supplying clean energy which does not add to the carbon footprint. Industries generate growth and in turn create employment opportunities, and so the official line goes. Importantly, public projects like these have been known to enrich the private coffers of those in power.

The Sarawak Corridor of Renewable Energy, launched in February 2008, is expected to add 1.5 million jobs in the state by 2030 and increase GDP by 5.5 percent per annum. The corridor would include a whole range of industries from downstream oil-based production and aquaculture to aluminium smelting and specialized glass making.

For example, the Australian mining giant, Rio Tinto Aluminium Ltd, has expressed an interest in setting up a RM7 billion smelting plant with Cahya Mata Sarawak Bhd, of which two of the chief minister's sons are key directors. Rio Tinto will reportedly need half of the total energy (1200 MW) produced by the Bakun dam, expected to be completed by 2011. Sarawak Energy Bhd (SEB) has also signed a MoU to supply energy to Tenaga Nasional Bhd (TNB) in Peninsula Malaysia.

The anti-dam group -- environmental NGOs, indigenous communities, some members in opposition parties in Sarawak -- have expressed alarm about the proposal to construct the new dams and the in-principle go-ahead given to another dam, the Murum.

The anti-dam forces have plenty of justification for concern, when their point of reference is the Bakun dam. The host of environmental issues, social impact on indigenous communities, engineering problems and cost overruns, and vested interests of the polity have been widely documented in the Malaysian press and NGO websites. In fact, the experience is generating grave concerns that history will repeat itself.

When the Bakun dam was approved in 1986, it involved the resettlement of 10,000 people from about 15 indigenous communities and the flooding of an area the size of Singapore. Studies have shown that the resettled communities have been under-compensated, biodiversity resources were compromised, native community rights have been overridden, and those ousted have experienced hardships which have not been adequately addressed by the state government even up to now.

Barring future cost overruns, the total cost of the dam is expected to be a whopping RM21 billion (about RM15 billion will be used to construct the proposed cable to link Sarawak to Peninsula Malaysia, which will only commence after the dam has been completed).

In the latest twist, in July 2008 Sime Darby pulled out from the mega project and relinquished both its ownership option and its involvement in constructing the undersea cable to channel electricity from Sarawak to peninsula Malaysia. The conglomerate cited economic factors although it said it would continue in its role as contractor and complete the construction of the dam itself.

Meanwhile, the state and federal governments have been attempting to allay public concerns by saying the project is progressing well and that the government is open to offers from other companies interested in completing the cable. The Second Finance Minister, Nor Mohamed Yakcop, has said that the government would seek new contractors to complete the undersea cables. The first cable is expected to be ready by 2013, the second by 2015.

Environmentalists have also repeatedly highlighted that the construction of the Bakun dam was due to vested political interests and grandiose plans of the then-prime minister, Mahathir Mohamad and Chief Minister of Sarawak Taib Mahmud. In 1994, the contract was awarded by the Sarawak government without tender to Ekran Berhad, a construction company owned by Ting Pek Khiing, a close ally to both leaders. Ting himself was a timber businessman, with no experience in dam construction. Subsequently, the project was shelved because of the financial crisis and Ekran's problems with its contractors.

The state cites rising fossil fuel prices which make energy sources generated from dams economically more viable. But for Sarawak, supplying energy from Bakun to the peninsula may not be viable as estimates have put the costs to as high as 30 sen (US 9 cents) per kilowatt hour if the undersea cable is completed. Currently, Tenaga only pays RM 17 sen for each kilowatt of energy. Furthermore, Sarawak already currently has 20 percent overcapacity in its electricity supplies (it has 900 MW but only consumes 700 MW excluding the 2400 MW energy that will be supplied when the Bakun dam is completed). And Peninsula Malaysia has about 30 percent overcapacity in its present energy demands.

So where does this lead to? Should the state government carry on as usual and go about constructing the new dams in spite of concerns expressed by environmentalists?

Rest assured, the federal government will not have much say in the matter after the watershed March 8, 2008 national elections. The talk by Anwar Ibrahim, leader of the opposition Pakatan Rakyat (PKR) coalition, of possible defections by MPs in Sabah and Sarawak after the upcoming September by-elections of the Permatang Pauh seat and PKR's offer to up petroleum royalties from the current 5 percent to 20 percent is enough to silence the ruling Barisan Nasional leaders on voicing their concerns over the economic viability of these additional dams. As such, the Sarawak government will be pretty much left to its own devices.

However, the state government should note that the backlash in the federal elections could also happen in Sarawak. Local elections are in 2011, though it is well known that the chief minister could call for early ones. The Sarawak government cannot continue to construct the new dams without listening to the voice of its indigenous communities and environmentalist NGOs.

The 2006 state elections in Sarawak itself already serve as a warning of things to come as nine seats were lost to the opposition. Previously, opposition parties only held two or at most three seats.

Although a change of government is unlikely, the opposition will likely increase its stronghold if the present ruling coalition continues to ignore public outcry over environmental excesses, in addition to ignoring the welfare of the Dayak communities in the state, which make up more than 40 percent of Sarawak's population.

Issues that are now pressing the state are adequately addressing its native customary rights in land ownership, providing adequate compensation for the revocation of land, opening discussions with the various stakeholders, and also a proper dispute settlement mechanism to avoid a repeat of the Bakun dam grievances which could lead to a state election debacle in 2011, similar to the Barisan's loss in March 2008.

[The writer is a fellow at the Institute of Southeast Asian Studies, Singapore. His research interests are in environmental management issues in Southeast Asia. The views expressed here are his own.]