WE ARE DAMMED!

Why would someone want to generate electricity through a giant hydroelectric plant in an area that does not demand that massive supply? Answer me that question and you can stop reading.





THE CORRIDORS OF POWER
by Hakim Joe

Why would someone harness the power of moving liquid and transform it into a clean and usable energy? The answer is of course for the electricity that is utilized to operate the multitude of electrical and electronic devices that we have. Simple answer.


Now comes the harder question. Why would someone want to generate electricity through a giant hydroelectric plant in an area that does not demand that massive supply? Answer me that question and you can stop reading.

The Bakun Hydroelectric Plant (BHP) is located on the wrong side of the divide. The requirement for more energy emanates from the power-hungry residents of West Malaysia where flashing neon lights and air-conditioned shopping centres swallow them up by the megawatts, and not the East Malaysians where everything is rather subdued. How much electricity does one require to light up a longhouse anyway? (That was meant to be a joke…continue to vote BN and they will make certain that you people remain in longhouses watching Charlie Chaplin reruns on black and white television sets without a remote control in a congested room full of houseflies.)

Seriously though, even the West Malaysians have more than sufficient electrical energy to run all their electrical components simultaneously without having to rely on those generated by the BHP. In fact, we are drowned in it up to our nostrils that Tenaga Nasional had to payoff the Independent Power Producers (IPP) to stop their respective plants generating more electricity into the national power grid. So, why the urgent need for a hydroelectric plant capable of generating another 500 megawatts of electricity (originally 2,400MW), a plant so massive that it is only eclipsed by China’s Three Gorges Dam in Asia?

Even the original plan of rerouting the excess electricity back west through undersea cables was flawed. Yes, hydroelectric generated power is far cheaper and cleaner than the coal-fired or diesel-fired plants but when has the Malaysian government ever cared about the pollution levels in the country? (Even Petronas sells their cleaner and more expensive petroleum overseas and imports the cheaper high sulphur petroleum for use locally and the introduction of the environmental less-unfriendly RON95 was only done this year.) About the only time when they start caring is when their drivers and bodyguards find it hard to look past the windshield of their limousines.

Okay, so the West Malaysians do not require this clean energy here but what about the East Malaysians? Do they not deserve clean fresh air with their electricity? Well, of course they do but someone’s got to pollute the environment there and all the smokers and recalcitrant backyard dry leaves and rubbish burners are just not up to it, hence the intervention of the government.

To make up for cleaning the air through the production of clean hydroelectric energy (instead of coal-fired), Putrajaya in partnership with the Sarawak State Government has plans on the pipeline to retain the environmental status quo by developing a humungous pollution and toxic fumes (hydrogen fluoride, sulphur dioxide, tetrafluoromethane, hexafluoroethane, nitrogen dioxide, polycyclic aromatic hydrocarbons, carbon monoxide and particulate matter PM-10 and PM-2.5) generating, electricity devouring aluminium smelter within its borders, a really gigantic one judging by its proposed production capacity of a maximum of 1.5 million tons a year.

Ha! Ha! You guys over there really thought that you are going to enjoy a breath of clean air, eh? Well, think again!

Oh, by the way, the largest existing aluminium smelter being built in the world is the Emirates Aluminium (Emal) plant in Abu Dhabi, capable of producing 1.4 million tons a year when it becomes operational after 2010. When the Malaysian plant becomes operational, it will be the largest in the world – Malaysia Boleh! (A Heads of Agreement has been signed between Rio Tinto and Cahaya Mata Sarawak Berhad in 2007.) More on CMS later.


Before we start with the serious stuff, let us look at the damned dam. If anyone reading this article thinks that a dam lasts almost forever, think again. Hydroelectric plants are not considered a renewable plant where constant maintenance will keep it going perpetually. (The engineers might think that their magical skills are all that is required to keep the dam going on indefinitely but this is a hypothetical scenario as the oldest serving dam is only 110 years old.)

The water might still flow but the dam cannot be salvaged after its expected lifespan and require decommissioning. Similar to our Buatan Malaysia products, they tend to be problematic right past their expiry date. Concrete under constant pressure fails after a fixed period of time. Nothing lasts forever and even God does not build things to last forever.

The International Commission on Large Dams (ICOLD) predicts a lifespan of 100 years (under present engineering designs) for those that are not maintained at all and double that for those that are well-maintained. It goes without saying that these predictions are made with the clause that the dams exist in a perfect environment. The ICOLD tracks all large dams (over 100-meters tall) in the world and at least 300 have experienced accidents. These were not all catastrophic failures, but if you are an engineer in charge of building an enormous dam, you definitely want to give some thought to what can go wrong. Remember Murphy’s Law.

Even the World Bank is sceptical of such mega load-bearing structures that they had stopped financing it completely. Additionally, if you are a resident living downhill where the dam is situated, you must seriously want to consider the calibre of Mara graduates. (That was another joke! To all Mara graduates, “stay cool lah!”)

Maintaining a dam is not easy either. With such a massive structure and its corresponding parts, a lot of predetermined inspection periods must be conducted properly and diligently. The powerhouse equipment can and will suffer a breakdown, the spillways will erode, the steel pipes might crack, the valves will fail, the retaining concrete wall might also suffer a crack at the bottom, the water will silt up, the sluice gates might get jammed, and a hell of a lot of other things can happen like someone might do a 911 with a hijacked plane or Thor might have forgotten to wear his bifocals and accidentally strikes it repeatedly (with lightning). Additionally, did you know that the construction of a large dam can artificially cause earthquakes to happen in areas previously thought to be seismically inactive? (28 earthquakes were registered in Sabah and Sarawak in the period between 1965 and 1994, the highest being a 5.8 tremor in 1976.)

The most powerful artificially induced earthquake caused by the construction of a huge dam (over 100-meters in height) is thought to be the 6.5 tremor that had it epicentre directly under the 103-meter Koyna Dam reservoir in Maharashtra, Western India in 1967 which flattened the village of Koynanagar causing 180 deaths. There have been 24 dams which have induced earthquakes of magnitude 4.4 and above (in recorded history) and in 17 cases, the tremors occurred within three years of initial Impoundment of the water. The Bakun Dam is 205 meters high, over twice the 100-metre height regarded by dam experts as likely to trigger off seismic activities.


The two worst accidents happened in 1963 and 1975 in Italy and China respectively. A huge rock fall into the Vajont Dam reservoir in Italy sent an enormous splash of water over the top causing a tsunami more than 80 stories high, sweeping downstream and wiping out several villages causing the deaths of almost 2,000 people. Massive rainfalls (record 41.7 inch within 24 hours) caused the failure of the Banqiao Dam in China where millions were left homeless and a victim count exceeding 200,000. Altogether this 1-in-2,000 year chance flood caused 62 dams to fail in a domino effect where the accumulated water from one uphill dam crashes into the following dam and the accumulated water from both dams crashes into the third dam and so forth. Nothing to do with a lack of maintenance and the Banqiao Dam was designed to handle an additional 12 inch of rainfall a day (which was already an overkill) but the sedimentation caused by the rainfall choked the spillways. Overall, 15.738 billion tons of water was released triggering a 10km wide wave only 7 meters high rushing downhill at a speed of approximately 50km per hour and wiping out an area 55 kilometers long, 15 kilometers wide, and created temporary lakes as large as 12,000 square kilometers. BTW, the 1-in-2000 year deluge was caused by Super Typhoon Nina (T7503), the second deadliest tropical Pacific typhoon in history with winds up to 250km/h at its peak.

Okay, enough of the horror stories let us now look at the initial profits before construction starts. What? Oh yes, this is one of those rare construction projects that earns money from the onset. To facilitate the site being ready, the area surrounding the construction site must initially be cleared and that means timber. In fact, access roads leading to the site must be built and that means more timber as the BHP is located inside the virgin rainforest of Sarawak’s interior. Let us do a wee bit of math here – the shortest route between two points is a straight line but why settle for clearing only the trees that is in the way between these two points when one is able to maximise profits if the route takes us past the densest rainforest in the region? So, instead of clearing the forest between Point A and Point B, we can reroute it from Point A to Point C onwards to Point D and then to Point E before we make a sweeping curve back to Point B. The overall yield is estimated to be in the region of 12 million cubic meters of timber from the deforestation of 56,000 hectares of virgin rainforest. The harvest is estimated to be able to fetch RM1.2 billion in total (1995 estimates) of which a quarter was harvested.

Enough said. Let us look at the history of the BHP. Initially conceived in the early 60’s, it finally got the go-ahead in 1986 when TDM gave it the thumbs up (as opposed to the thumbs down given to Mohd Isa in the Bagan Pinang by-election) and preliminary studies were conducted to assess the feasibility of constructing a 205-meter high dam capable of producing 2,400MW of hydroelectric juice annually. This was at a time when Malaysia was slowly recovering from the 1985 recession and by 1990, the boasts of having the largest hydroelectric dam in Asia (China’s 3 Gorges Dam was not conceived yet) came back to haunt the Malaysian government as they were forced to shelf it due to the low demand for electricity and high cost of building it. Strike One.

As a stubborn man who can never accept no for an answer, TDM revived the US$5.2 billion “deal of the century” project again in September 1993 and awarded it to Ekran Berhad (without a public tender exercise) in 1994. (Ekran’s CEO’s wife is the now infamous “I don’t know what is projected cashflow” former PKA General Manager and PKFZ MD Datin O.C. Phang.) One of the major shareholders of Ekran is Rasip Harun. Who is he? Rasip is the business partner of Tun Daim Zainuddin (who happens to be the Finance Minister at that time). Coincidence? Rasip is also the partner of Robert Tan Hua Choon (another one of Daim’s business partners) who controlled Jasa Kita Sdn Bhd, a company involved in the Maika Telekoms share diversion. Remember Samy’s proxy company Clearway Sdn Bhd? Robert Tan’s driver (Baharuddin M. Arip) happened to be a director of that company. Rich driver indeed! (Probably comes to work in a Lamborghini.)

How did a Chinaman from Sarawak lay his hands on “the deal of the century”? TDM is after all no Cina Apek lover and his continuation of support for the NEP only serves to reinforce his ambition to see his cronies get enriched in government projects, and there are certainly more than enough of these people to serve his needs. Okay, one good deed deserves another and TDM is merely reciprocating a “debt of honour”.

The story goes like this. Ting Pek Khiing was a two-bit small time construction subcontractor picking up low-margin construction jobs in Sarawak but he had a reputation as the “Speed Demon” where no jobs are too complicated or too short a period to complete. His “never say die until you meet the God of Hades” attitude soon caught the eye of Emperor Abdul Taib Mahmud, and they soon found each others’ company “enriching”. Being a crafty Chinaman, he soon latched on to the Emperor’s two princes (Mahmud Abu Bekir and Sulaiman Abdul Rahman) and they formed a company seeking timber concessions from the Sarawak government. To Ting, it seemed like all his Christmas(es) have arrived together. On the other side of the horizon, TDM found himself in a pickle after sending out gilded invitations to the high and mighty of the international aerospace industry to kick off his inaugural international air show on Langkawi Island. No, there is nothing wrong with the air show except that the construction of the new convention resort is ambling along at such a pace that the invited guests might start fighting for the park benches after their arrival. The ever so helpful Taib knew of this and recommended Ting to TDM. Now, TDM does not suffer fools gladly and Ting’s “can do” motto was soon put to the test. Ting went on to slap together the remainder of the resort in a record breaking three months, saving TDM the embarrassment of ever having his invited guests sleep in the open, and earned himself the nickname of Ting Pek “Speed” Khiing. A star is born (no, not Barbara Streisand).

Ting, whose total knowledge about building a dam can probably fit on a single line on an A4 paper, hired Asea Brown Boveri (ABB) of Zurich and Companhia Brasileira de Projetos e Obras (CBPO) of Brazil as the contractors and formed a construction consortium consisting of Ekran Berhad, Tenaga Nasional Bhd (TNB), the government of Sarawak, Sarawak Electricity Supply Corporation (Sesco), and Malaysia Mining Corporation Bhd (MMC) – Syed Mokhtar was bound to have some kind of involvement in TDM’s projects.

So, how does one go about building a dam? Well, first you need to clear the land, and I mean “clear the bloody land” and that includes any indigenous people living there. Wildlife? Get rid of them all. Foliage and vegetation? Clear them out. Man-made structures? Flatten them. Timber? Keep and sell them.

Negotiations soon started between the indigenous people and state government. The almost 9,000 natives will be relocated to Sungai Asap under the Asap Resettlement Scheme (Operation Exodus) and each family be given 3 hectares of land gratis. This is of course pending on the outcome of the EIA report. (The natives eventually received 3 acres each, not 3 hectares as promised – suckers!)

Financing of this massive project was shady, to say the least. Investment capital was announced as a matter of fact stating only that the Sarawak government together with Ekran will provide 51% of the financing and the remaining 49% will be harvested from money-growing-trees. Okay, fair enough but how will abang-adik provide for the 51% which amounted to RM7.65 billion? Initially, Ekran launched a rights issue to finance the building of the dam, but it was pitifully undersubscribed (Ting had to eventually payout RM500 million). Well, EPF allegedly chipped in RM3 billion, the Pension Trust Fund for Bakun contributed RM400 million, and Hicom and TNB made up the rest. More of it later on.

Let us look at the two main contractors. First, ABB. Not a very good sign already. This is the same company under the same management that sold seven gas turbines valued at $500 million for $1 billion each to TNB. (Wonder where the excess money went to.) Then there is CBFO, the company that built both the Itaipu and Xingu dams in Brazil. Both went over budget by 488% and 100% respectively. Great, eh? And then there is the preliminary work performed by South Korea's Dong-Ah Construction and Industrial Co, the same company that built the Songsu Bridge over the Han River in central Seoul which collapsed killing 32 people in 1994. Getting better, right? Fortunately the 1997 Asian economic crisis brought things to a screeching halt after construction started in 1996. Strike Two.


Due payments were then made to Dong-Ah (RM400 million) for completing the river diversion tunnels, Global Upline (RM60 million) for completing the auxiliary coffer dams and an undisclosed sum (rumoured to be in the region of RM1.8 billion) to Ekran as compensation for kicking them out. The government had also turned over a sum of RM1 billion to the Bakun Dam Consortium for the purchase of 8 hydropower turbines (the contract eventually went to IMPSA of Argentina and Alstom of France). BTW, Global Upline belongs to Ting as well.

IMPSA managing director Juan Aguero later revealed that they had secured the contract to design, manufacture, assemble and commission 4 of the 8 turbines at the Bakun project for RM300 million. The math doesn’t work out correctly, agree? If 4 turbines cost a total of RM300 million, 8 turbines should cost twice that amount, i.e. RM300 million times 2 equals RM600 million. So, where is the other RM400 million? Maybe the dog ate it or is this a case of what we call “escalating inflation”?

In 2000, plans were renewed to revive the project. Sarawak Hidro, a 100% government-owned company was established to take control of the construction of the Bakun Dam. The initial plans to transmit the additional electricity back to West Malaysia was now abandoned as the cabling project cost more than the remaining construction of the dam.

In 2002, the new main contractor was named. The Malaysia-China Hydro JV (MCH), a 70:30 consortium led by Sime Engineering Berhad of Malaysia (a subsidiary of Sime Darby) and Sino-Hydro Corporation of China. Other members of the consortium are WCT Berhad, MTD Capital, Ahmad Zaki Resources, Syarikat Ismail and Edward & Sons. Dato' Mohamad Shukri Baharom is the Chairman of this company and also the executive VP of Sime Darby Group's Energy & Utilities Division. The new completion date was summarily revised to February 2008.

Two years later, the engineering consulting firm JR Knowles of the UK (no relation to the sexy “PAS kata haram” Beyoncé Knowles) was hired to study the delays in the construction of the dam. The spanking newly revised and freshly amended completion date is now sometime in 2010 (probably February the 30th.) Also in 2004, Global Upline (owned by Ting) was allegedly awarded the contract to clear the biomass in the flood basin. One company (under the name of Pacific Chemicals and also owned by Ting) had already “cleared” a quarter of it (in 1995) and another was “just coming back to finish off the job” in an alternative form.

Let us leave the construction side of things and access the feasibility of using the excess energy being churned by the 8 turbines. Here is where the aluminium smelter comes in. Forget about the non-income generating toxic gases for awhile and concentrate on the electrical usage. This mega smelter requires 50% of the total electricity produced by the Bakun Dam and that means a huge and constant income for Sesco (1,200MW at a selling price of RM0.286 per unit equals RM343.2 million a year. The current IPP selling price to TNB is RM0.017 per unit. The total margin would be RM322.8 million a year.). Additionally, it will provide an extra 4,700 jobs. Wow! We can even construct huge fans in arrays and blow it in the direction of Indonesia if they do not control their annual forest fires! Double Wow!

As mentioned above, the two suspects in this joint venture are Rio Tinto (largest aluminium manufacturer in the world) and CMS. Never heard of Cahaya Mata Sarawak Berhad before? Well, it was called Cement Manufacturers Sarawak Berhad when it started business in 1974 producing Portland cement as a state-owned firm. It was in the 90’s that it was privatised from a state-owned public-listed company into a private sector public-listed conglomerate. Why would someone takeover such a dull company? Let’s look at what CMS owned before they were privatised - PPES Quarry, Steel Industries Sarawak and PCMS, all profitable companies. After the takeover, CMS continued consolidating their company by purchasing Syrakusa Sdn Bhd and Concordance Sdn Bhd, via cash and share swaps. In a reverse takeover, the owners of these two companies acquired CMS and began injecting their other assets into it including Bank Utama, Sarawak Securities and Archipelago Shipping. CMS is now a diversified conglomerate involved in stock brokering, road construction, water filtration and treatment, quarry operations, civil and structural engineering, steel bar manufacturing, trading of construction materials, cement production, technology, education, financial services and investment holdings. No prizes for guessing who owns CMS – the Mahmud family. Oh, by the way, Taib Mahmud’s spouse Laila and his children are the majority shareholders of Sitehost Plc, Australia, which owns the 380-room Adelaide Hilton Hotel. Company records dated December 2000 show them holding 95 percent of the company or 9.5 million (Aussie dollars) fully paid up shares. One question: How much does a hotel cost anyway? Another family member (Taib’s brother Onn Mahmud) along with his daughter and son in law owns SAKTO Corporation, a major real estate operator of non-residential buildings in Ottawa, owning and managing more than half a million square feet of prime office space with affiliate offices in the US, UK, Asia and Australia. They also own SAKTO Development Corporation, a multi-million dollar development and construction company in Ottawa.

Back to the construction site. In 2007, the government once again revived the cabling project. The new estimates (from TNB) are approximately RM9 billion. Others put it as high as RM20 billion, depending on the number of cables involved. These include the Bakun to Bintulu HVAC double circuit overhead lines for a distance of 160 km, Bakun to Tanjung Parih HVDC overhead line for a distance of 670 km, Tanjung Parih to Tanjung Tenggara submarine cable for a distance of 670 km and the Tanjung Tenggara to Kuantan landline to connect to the national grid. The government in fact invited Sumitomo Corp of Japan to do a feasibility study report and assist in the laying of the submarine cable. The longest existing submarine cable is the 580km NorNed undersea connection linking Norway and the Netherlands.

The once revised 500MW capacity is once again back to the original figure of 2,4000MW with 1,600MW being rerouted back west and the completion date has been pushed further back by another year. This is done with the assumption that Rio Tinto would back out of the aluminium smelter deal. However plans are being drawn to construct yet another dam (the 1,000MW Murum Dam in the Upper Rejang Basin of central Sarawak) and concept studies are being prepared for the construction of an enormous 20,000MW hydroelectric dam along the Rejang River rivalling China’s 22,500MW Three Gorges Dam.

In 2008, Sime Darby announced that the company will not be taking up the offer of an equity stake in the Bakun project. This prompted the government to search for another shareholder and at the beginning of this year, TNB and Sarawak Energy Berhad (SEB) were granted permission by the federal government to form a special purpose vehicle to jointly takeover the entire project from Sarawak Hidro through a leasing agreement. Additionally, the Xinhua News Agency published a report on its website revealing that four Chinese state-owned enterprises, including China Sinohydro Corp, had been "downgraded" because of "safety or environmental pollution accidents". Sinohydro is one of seven firms in the Malaysia-China Hydro Joint Venture consortium working on the Bakun Dam.

The proposed public tender for the undersea cable laying process is expected to be held next year. The manufacture of these RM4 billion cables was promised to FCW Holdings way back at the onset of the project by TDM but anything could happen now that the government is under a new administration. (FCW Holdings is owned by Ting and allegedly also by one of TDM’s son.)


One last thing, the planning of the dam was conducted with no public accessibility to vital feasibility studies, no process of public feedback on the Environmental Impact Assessment (EIA) process and limited consultation procedures with the indigenous peoples. Feasibility studies and reports commissioned by the government on the Bakun project have been classified under the Official Secrets Act (OSA), meaning it is a criminal offense for anyone to see or use their information. Not all of the appendices, interim and final reports of the EIAs have been made accessible to the general public. Project proponents have refused to meet critics in any open discussion.

Cost overruns? Maybe, but one won’t get to hear about it as this information is classified (unless MT gets their hands on it). Let’s just put it this way – if a RM1.8 billion project situated in nearby Klang can balloon to a staggering RM12.5 billion, what are the chances that a US$5.2 billion (approximately RM26.3 billion) project situated in the middle of the forest in Sarawak, coming in on budget?

Jinxed dam? Perhaps, but one thing is certain – we (the taxpayers) are damned. - Malaysia-Today