The controversial 2400MW project, currently being reviewed for economic viability, will now proceed but is first to be restructured, said Deputy Prime Minister Datuk Seri Najib Tun Razak in Kuala Lumpur, Malaysia.
The announcement marks a major step forward for the scheme, which has been criticised not only for its potential to flood large areas of the Borneo rainforest, but also for the uncertainty over whether it can find a large enough market for its power. Doubts about the feasibility of the scheme were raised in the local media earlier this year when it was claimed that an aluminium plant in Sarawak state would be the only buyer of Bakun’s electricity, and rumours circulated suggesting the project was to be scaled down
However, in a separate press conference on 26 July, Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said the project would still generate 2400MW. He said that Sabah would be taking 700MW of electricity while Sarawak would take another 500MW. The two states were also expected to take 40% more by 2010. Discussions with the owner of the aluminium plant continue, but Yaik also said that parties from China had expressed an interest in setting up other aluminium plants in the area because of power shortages.
Since its inception the project has been surrounded by controversy. In 1994, the government decided to implement Bakun dam as an independent power producer (IPP) project targeted for commissioning in 2003. However, following the impact of the Asian financial crisis in 1997-98, the original government-appointed Bakun dam project developer, Sarawak tycoon Ting Pek Khing, was unable to proceed with the project and returned it to the government receiving US$110M compensation.
After deferring the project for three years the government decided to revive Bakun, and announced it would be managed by Sarawak Hidro Sdn Bhd, a wholly-owned subsidiary of the Ministry of finance.
The project is scheduled to commence commercial operation by the fourth quarter of 2007.