Sarawak Hidro Sdn Bhd, developer of the 2,400-MW Bakun hydroelectric project, plans to raise about 3 billion ringgit (US$819.6 million) to refinance existing debt and fund capital expenditure.
Malaysia’s Business Times said September 8 that Sarawak Hidro has approached CIMB, Aseambankers, RHB Sakura Merchant Bankers, and Affin Investment Bank to help arrange the funding exercise. The paper said it was unclear what funding instruments would be used.
The hydro project is 75 percent complete, but has no customer for its power. Although Malaysia had a power shortage when the dam was approved 12 years ago, there is a surplus now. However, one power sector analyst said reserve margin will have declined by 2012.
Originally, Bakun’s power was to be taken by an undersea cable more than 500 kilometers from the project site in Sarawak State on Borneo Island to peninsular Malaysia. However, that plan was dropped in favor of a proposal to build an aluminum smelter on Borneo to use the power.
Now, the government is looking at both plans, but is not totally convinced of either. (HNN 8/23/06) Energy Minister Lim Keng Yaik said the cost of each plan is huge and the stakes are high.
Firms including Rio Tinto, Alcoa, BHP Billiton, and China’s State Grid Corp. are reported to have expressed interest in setting up a smelter in Sarawak. However, government has said the proposals lacked sufficient local participation or failed to make a strong economic case.
Until Malaysia’s power surplus is committed, the government is being urged to consider exporting Bakun’s power to Singapore, Indonesia, and Thailand, once it has been brought ashore via cable.
Swiss engineer ABB and local firms Eden Enterprises and Malaysian Resources Corp. are among those vying to build the undersea cable, media reports have said. They say it could cost up to US$2 billion.