Friday, July 27, 2012

Megaprojects like Bakun Dam are doomed to abysmal failure in Malaysia...

Malaysian Robber Barons Mahathir Mohamad & Taib Mahmud (Azlan Zamhari/Malaysiakini)

Umno mafia boss & ex-finance minister
Daim Zainuddin
More than 8 years have elapsed since the following information came into my hands, but very little has changed in Malaysia.

Robber barons continue to misrule and ruin the landscape with their grandiose multibillion-ringgit megaprojects (mostly unnecessary, extravagant and purely decorative) - impoverishing humble folk, exposing them to unknown hazards, and leaving them landless and desperate.

Bakun Dam - the ultimate monument to hubris, megalomania and terminal myopia - was first approved by the Malaysian government in 1986. It was shelved in 1990 after the recession of 1985 led to a drastic decrease in electricity demand.

Prime minister Mahathir Mohamad decided to revive the Bakun Dam project in September 1993; and in January 1994, a privatized contract was awarded to Ekran Berhad - a construction company owned by Sarawak timber tycoon Ting Pek Khiing, whose main expertise was fast-tracking resort hotels.

Sarawak timber tycoon
Ting Pek Khiing
The Bakun Dam swiftly turned into a financial nightmare - except for Ting Pek Khiing who received RM1.1 billion compensation on top of free access to all the precious timber found within 10 square kilometers of the site. It was a colossal white elephant that should never have been attempted - because it was patently unnecessary and massively destructive of the primordial rainforest and its diverse flora and fauna - including indigenous human tribes who have inhabited the region for countless generations.

Alas, all robber barons are driven by their inflamed egos that tend to see serious obstacles as mere challenges. They also have a nasty habit of being obnoxiously arrogant and insatiably greedy.

The accursed Bakun Dam (image courtesy of Sarawak Report)

I received a copy of the following email on 14 April 2004 from Susanne Wong of International Rivers, a global NGO dedicated to saving free-flowing river systems from being dammed in the spurious name of "development":

From: Susanne Wong
Sent: Wednesday, April 14, 2004
Subject: Leaked information on Bakun

We recently received emails from a former cost controller for Bakun who quit because of frustration over construction delays and cost overruns. He leaked the attached documents to us which contain information on costs and the plan to get the project back on schedule.

Obviously this information and the contact's identity must be treated very sensitively. We're not sure what we can do with this information and thought you could best use it in Malaysia for some media exposes of the project or whatever you see fit. I've included the email exchange between us below.

Hope you can use this. This disastrous project just seems to be getting worse.

Best wishes,

On top of massive environmental and social ruin, shoddy construction and low-grade cement (Sarawak Report)

From: "Whistle Blower"
To: Susanne Wong
Date: Tue, 13 Apr 2004

     Ms. Susanne,
It's my pleasure to assist you. The construction is behind schedule due to the inexperience of the contractor (Sime Engineering) who has undertaken this project. For your information, Sime Engineering does not have the capacity and expertise to handle big civil projects. They have only done several oil and gas projects such as building and fabricating oil rigs. The 'screw up' is mainly due to late approval of the design and delays in awarding the sub-contractor package. 
     The cost overruns incurred are mainly due to the lack of proper ground surveys. For the entire 10 square km area, only l8 boreholes were done. The contractors made their first mistake by excavating the wrong area. They excavated approximately 600,000 cubic meters of overburden and still could not find enough rock for the dam fill. After the extra survey was done, they found out that they would need to excavate approximately 2,000,000 cubic meters to find rock. Sime Engineering is unable to decide if they should continue excavating that area or start all over again elsewhere. The cost overrun to date is already around USD52 million.
     The project is one year behind schedule now. The 6-month recovery plan has yet to be approved by the Ministry of Finance. Original cost estimates only focused on construction but did not include design, procurement, and so on. Many details are still kept secret by the ministry.
     Sarawak Hidro Sdn Bhd (SHSB) are facing financial problems. They have voiced their intention to issue a bond for this project but the 2nd Minister of Finance (Nor Mohamed Yakcop) said there is no hurry to issue bonds for Bakun. I bet you know the reason why.
     Actually, this project is not bankable, since the return of investment takes a long period and there is an oversupply of power (especially after the Aluminium Smelting Project by GIIG was shelved).
     Lastly, think about passing the information to your Malaysian counterparts, e.g., Sahabat Alam Malaysia and Suaram. I think we have to play it smart. In Malaysia we have an act called the Official Secrets Act (OSA). Since this information can be regarded as government secrets, I trust you will handle it professionally. This is not the US, where people can speak freely.
     Regarding the photos, I will have them burned on a CD and mailed to you if you provide me the address.

Aerial view of Bakun Dam

From: Susanne Wong
Date: Tuesday, April 13, 2004 

Dear Mr. Whistle Blower,

Thank you for sending the recovery plan and spreadsheet. It is extremely useful information.

Can you provide more information on the financial problems with SHSB? I would like to send the information to my colleagues in Malaysia but wanted to check with you first to make sure this is okay. I'm sure our colleagues at Sahabat Alam Malaysia and Suaram would be very interested in using these documents to expose the problems with Bakun. Would it be acceptable if I forward them this information and put them in direct contact with you? If you prefer, IRN can act as an intermediary and pass the information on to our friends in Malaysia and we can keep your name confidential. Please advise.


At 01:11 AM 4/9/2004, you wrote:

Ms. Susanne Wong,

Herewith something for you to read, it is the Recovery Plan for Bakun Hydroelectric. It was drafted last November, 2003. Until today it has yet to be approved by the Ministry of Finance.

Bakun Dam ‘Unsafe’ ~ Exclusive Evidence on Corner-Cutting and Sloppy Construction Practices