Sarawak plans ambitious 'Aluminium City'

Proposal to buy Bakun hydro-electric dam is part of audacious plan to attract aluminium related businesses to set up shop in the area
S Jayasankaran Business Times 9 Oct 10;

THE Sarawak state government's RM6-7 billion proposal to buy the Bakun hydro-electric dam from the federal government is based on a plan to transform the area into an 'Aluminium City' comprising smelters, downstream manufacturers and metallurgical research and development facilities.

According to a senior state official, the plan calls for the 2,400 megawatt dam to have two main customers - both aluminium smelters. Smelters require huge amounts of power, which is why they require 'cheap' energy that can only come from renewable sources like hydro-electricity.

The idea is that with the right incentives, the state's enormous production of the metal would soon attract aluminium related businesses to set up shop in the area permanently to create the so-called Aluminium City. 'It is a big undertaking because we will have to spend money to put in the place the right infrastructure,' the official said. 'But we believe the federal government will help.'

The audacious plan reflects Sarawak's wish to transform its economy away from over-dependence on commodities - oil and gas, palm oil, timber and pepper - to sectors like industry and services. Sarawak is one of the few states in Malaysia that routinely runs up budget surpluses, which is why it can fund the acquisition - but it is relatively under-developed compared to Peninsular Malaysia.

Two weeks ago, Sarawak Chief Minister Abdul Taib Mahmud announced the huge offer for Bakun Dam - and said he was willing to compromise.

'We have made our bid of RM6 billion but it 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 told reporters in the state. The official said the state could go up to RM7 billion if need be.

The dam is owned by Sarawak Hidro, a wholly owned subsidiary of the Ministry of Finance. But Sarawak's offer is likely to be accepted - a notion confirmed by Deputy Prime Minister Muhyiddin Yassin last week. ÂÂ

The Bakun project, Malaysia's largest hydro-electric dam, is located on the Balui River in the upper Rejang River basin, 37 km upstream from Belaga.

It was mooted in the early 1980s by the federal government to diversify the country's power sources and was first awarded to Ekran, a company controlled by Sarawak businessman Ting Pek Khing. Physical work on the dam started in 1994.

Sarawak Hidro was established to take over development and management of the project in 2000 after it was crippled the Asian financial crisis of 1997-98.

At end-2002, a Sime Darby-led consortium won a competitive tender to undertake the civil works for the dam for less than RM1.8 billion.

The work was completed last month, with flooding set to start this month. Sarawak Hidro's managing director Zulkifle Osman said yesterday it will begin as early as next week.

Mr Zulkifle said it will take about seven months for the water to reach the minimum operating level of 195m above sea level for tests of the dam's turbines to be carried out.

The scale of the project is mind boggling. Impounding the Balui River, according to Mr Zulkifle, will enable water levels to rise steadily to flood 69,500 hectares of land - an area about the size of Singapore. Bakun will also be the world's second tallest concrete rock-filled dam.