DEIA rejection temporary setback to Sabah coal power project

Ruben Sario The Star 21 Aug 10;

KOTA KINABALU: A rejection of the Detailed Environmental Impact Assessment (DEIA) for a controversial coal-fired power plant in Sabah’s east coast appears to be only a temporary setback for the project’s proponents.

Officials of Lahad Datu Energy Sdn Bhd (LDE), the company undertaking the 300 MW coal plant project, said they were closely studying the Department of Environment’s (DOE) notification to reject the DEIA.

“The department gave its reasons for rejecting the DEIA. In that letter, it also gave us the opportunity to re-submit the DEIA. We are looking into this,” Lahad Datu Energy project manager Ahmad Farid Yahya told StarBizWeek when contacted yesterday.

(LDE is 80% owned by Lahad Datu Holdings while Yayasan Sabah has the remaining 20% stake).

Lahad Datu Holdings meanwhile is a company formed by Tenaga Nasional Bhd (TNB-51%), Eden-Nova Sdn Bhd (35%) and Maser (M) Sdn Bhd (14%).)

Sabah Environmental Protection Department (EPD) director Yabi Yangkat had said on Thursday that he had been been informed of the DoE’s decision by the department’s director-general a day earlier.

Yabi said the main reason for the rejection was that many important environmental parameters in respect of the proposed project was not addressed in the DEIA.

He said the DOE also took note of the range of shortcomings and queries raised at the DEIA panel review meeting at the department’s office in the state capital on Aug 27.

Among those at the panel review were representatives of a group of NGOs under the umbrella name of Green Surf (Sabah Unite to Re-Power the Future) comprising among others WWF Malaysia and the Sabah Environmental Protection Association (Sepa).

Immediately after DOE’s decision became known, Green Surf spokesman Wong Tack said the DEIA rejection was enough reason for the project to be scrapped.

Wong, the SEPA president, said it was time for all stake holders to work together to come up with alternative solutions to dirty energy like coal, in solving Sabah’s power supply needs.

State power supply provider, Sabah Electricity Sdn Bhd (SESB) had estimated that by 2025 Sabah’s demand for electricity was expected to reach 2,330 MW.

The present capacity is 755 MW, with reserve margin at less than 20%. This margin goes to below 10% if the risks of existing aging diesel-fired power plants are taken into account.

With rapid development, including various initiatives generated by the Sabah Development Corridor, the state would require at least 820 MW by this year.

Sabah’s power demand is expected to grow at an estimated 7% to 8% annually.

Opposition almost instantly brewed after plans were announced for the construction of the coal-fired plant at Silam in the Sabah east coast Lahad Datu district four years ago following concerns over its environmental impact on the nearby pristine Danum Valley conservation area.

(In February 2008, TNB awarded RM1.01bil contract to China National Electric Equipment Corp to build the coal-fired plant. The contract was awarded through Lahad Datu Energy.)

The Sabah government subsequently relocated the project to Seguntor in Sandakan but had to backtrack on its decision following stiff opposition to project from folk in the east coast district.

Finally, on a visit to the east coast town of Tawau in September last year, Prime Minister Datuk Seri Najib Razak announced that the project would be sited at Kampung Sinakut an area was part of the Felda Sahabat land development scheme, some 100km from Lahad Datu town.

But many Sabahans worry about the environmental impact of the power plant and question whether coal was necessary as Sabah had numerous natural gas reserves apart from tonnes of biomass or waste its oil palm industry.

They point to a Universiti Tunku Abdul Rahman (UTAR) study last year that found that hydropower, biomass and the Bakun dam are feasible alternatives to a coal-fired power plant in the state.

These options meet key objectives of the National Energy Policy, which includes promoting the use of clean energy and minimising negative impacts of power production to the environment.

Results also show the options are not only environment friendly, but also better ways of generating power in terms of cost. This was revealed in a paper written by UTAR doctoral student Koh Siong Lee and his supervisor Dr Lim Yun Seng.

The paper used Sabah as a case study to investigate the feasibility of achieving a balance between needed economic growth and protecting the environment.

“It is very encouraging to find from the results that, not only are these options more environmental friendly than the coal plant, the financial performance compared well with that of the coal plant.

“This is mainly due to savings from the fuel cost. These three options have higher capital cost. However, with zero fuel cost, the annual running cost of the plant is much lower than that of the coal plant, resulting in low lifetime cost,” Dr Lim and Koh said.

The paper warned that tourism may suffer as there was concern the coal plant would threaten sensitive ecosystems that attracted a large number of travelers to Sabah.

“In the case study of Sabah as a developing economy, it was found that the need for energy at a competitive price can be achieved with options which do not damage the environment. The renewable and green options are technologically proven, financially attractive and emit little greenhouse gases,” Dr Lim and Koh stated.

In their paper, they also recommended that there should be “minimum barriers” for SESB and the government to adopt biomass from palm oil, hydropower and electricity from Bakun which have more than adequate potential to meet 300 MW that would be generated by the coal plant.

Tenaga Nasional Bhd chairman Tan Sri Leo Moggie in explaining the rationale of the coal-fired plant had said the company had considered various options before deciding on a coal-fired plant for Sabah’s east coast.

He pointed out TNB was already operating larger coal fired plants in the peninsula such as the 2,100 MW facilities in Manjung Perak and Tanjung Bin in Johor with minimal impact on the environment.

Every possible fuel option was considered before deciding on coal as the choice. A gas-fired plant would have been preferred. It is certainly more environmentally acceptable apart from being faster to build, Moggie noted.

But he also added that the natural gas was only available in the west coast of Sabah and a power generation plant was needed in the east coast.

He said power planners, including consultants engaged by SESB, agree that with increasing demand, the absence of a power plant in east Sabah will render electricity supply in the state extremely unreliable. Sabah will be wholly dependent on power plants located in the west coast.

A power plant in the east coast is crucial to provide system reliability and generation capacity under an “islanded” operation when the east-west link is interrupted, thus providing acceptable security of supply for the whole state, Moggie added.

It also provides flexibility of the transmission system. The development of a new power plant in the east coast will also enable SESB to retire its aging, unreliable, noisy and highly polluting diesel sets currently in operation in Sandakan, Lahad Datu, Tawau and

Semporna.

He said coal was the most economically viable fuel option for the east coast of Sabah, against other alternatives.

Abundance supply of coal from nearby huge Kalimantan coal reserve will provide secured supply of coal, at competitive price thus ensuring continuous operation of the plant and optimum cost of supply/tariff, he added.

Moggie also noted that biomass is only suitable for producing small volumes of power within the range of 2MW to 10MW.

Similarly, the use of diesel is only suitable for producing small amount of power suited for stand-alone stations. These, however, are also costly and polluting.

At present, the technology for renewable energy is of little help, To produce 300MW of power, over 50,000 solar panels and about 90 sq km of land would be required.

To plant up over 300 wind turbines would require land bigger than the size of Singapore, he added.

Firm to find out why EIA was rejected
Julia Chan New Straits Times 21 Aug 10;

KOTA KINABALU: Lahad Datu Energy, the company behind the controversial coal-fired power plant project in Lahad Datu, is studying the reasons for the rejection of its environmental impact assessment by the Department of Environment (DOE).

Plant director and project manager Ahmad Faraid Yahya said the company was considering to appeal and resubmit its detailed environment impact assessment (DEIA) report.

"For now, we are just going through the letter and the stipulations into why the report was rejected," he said yesterday.

The decision to reject the DEIA, prepared by UKM Pakarunding, was reportedly for not addressing environmental parameters.

The rejection is seen as a big step towards the scrapping of the project after objections from environmentalists and non-governmental organisations.

Sabah Environment Protection Department director Yabi Yangkat said the rejection was based on several concerns that were not addressed, including questions raised by the public and NGOs at the panel of review meeting.

"There were many aspects. From the efficiency of the coal technology to ash travel... if the project proponents can address all these issues and submit a fresh report, it could be approved in the future," he said.

Lahad Datu Energy is a joint venture between Tenaga Nasional Bhd and several private companies, including state-owned companies.

Work on the 300mW plant was scheduled to begin next month at Kampung Sinakut in Felda Sahabat, and is intended to meet the shortage of electricity supply in the east coast of the state.