Compensation to Ekran for the postponement of Bakun project will set the dangerous precedent where taxpayers will also have make mega-compensations for the other postponed mega-projects

- Budget '98 Committee Stage
(Ministry of Energy, Telecommunications & Posts)
by Lim Kit Siang

(Dewan Rakyat, Tuesday): Malaysians are aghast at the government takeover of the Bakun hydroelectric dam project from Ekran, and Anwar's denial that this was a bail-out of Tan Sri Ting Pek Khiing lacks credibility.

Anwar's shocking announcement raises many public interest issues particularly with regard to the propriety of the government takeover of the Bakun project and the use of taxpayers' money to compensate Ekran Bhd.

The RM13.6 billion Bakun hydroelectric dam project was awarded to Ekran in conditions of total opaqueness, with no transparency whatsoever, and in the face of strong public opposition, whether from financial, economic, technical, social or environmental viewpoint. If the government had heeded public opinion, the Bakun hydroelectric dam project would not have been awarded as a privatised project to Ekran Bhd., and there would have been no need to pay any compensation to Tan Sri Ting Pik Khiing or Ekran Bhd.

The relevant question is why the taxpayers should pay for the mistakes of a government which refused to listen to the views of the people?

I understand that the amount of compensation which the Government would be paying to Ekran Bhd. would be in the region of RM700 million - RM300 million for management fees and RM400 million for construction costs.

The people can still remember that at one time, Ekran had demanded RM1 billion for project management fees on the ground that the original award for Bakun was secured by the company - an indication of the exploitative nature of the Bakun dam project.

In any event, these are indeed exorbitant figures. Are these colossal sums of compensation justifiable?

Furthermore, what about the colossal proceeds which Ekran had collected from timber logging sales undertaken so far in the area concerned.

Malaysians demand that there should be full transparency and accountability in the question of compensation to Ekran. Before the government agrees to any sum of compensation to Ekran, the compensation proposal should first be submitted to Parliament for approval so that the Malaysian public can be given full assurance that the government take-over of the Bakun project is not a bail-out for Tan Sri Ting Pek Khiing and Ekran Bhd.

The government take-over of Bakun project has raised a very serious issue as to whether it would set the dangerous precedent where taxpayers will also have to mega-compensations for the other postponed mega-projects, like the Putrajaya Administrative Centre Phase II, the Northern Regional International Airport, the Kuala Lumpur Linear City Project, the Cameron Highlands-Fraser Hill-Genting Highlands Road Project and the Straits of Malacca-Indonesia Bridge which cost over RM52 billion. From the start of the secretive revival of the Bakun dam project in 1994, after it was scrapped by the Cabinet in 1990 for environmental reasons, strong objections had been made towards the project, such as:

Ekran Berhad has been in serious trouble even before the latest stockmarket crash. When they tried to initiate a rights issue this year, the market clearly expressed its lack of confidence in the company.

The one-for-one Ekran rights issue was greatly undersubscribed by 63 per cent. . Only 95.73 million rights or about 37% of the 257.14 million issue were taken up.

This resulted in Ting Pek Khiing scrapping plans for a rights issue to raise another RM3 billion for the project which changed the whole capital structure of the project, from the originally proposed RM6 billion equity capital and RM8 billion borrowings to RM3 billion equity capital and RM11 billion borrowings.

The government should clarify what will be the scale of the project when it is resumed. For example:

What has happened Ting Pek Khiing, RM5 million pledge to the Bakun Trust Fund to provide assistance to the 9,500 residents affected by the dam project. This pledge was made in the presence of the Prime Minister, Datuk Seri Dr. Mahathir Mohamad and the Sarawak Chief Minister, Tan Sri Abdul Taib Mahmud at the launching of the Bakun Trust Fund in Sibu on August 8 last year, and Ting was supposed to hand over the money a week after the pledge. The government takeover of Bakun cannot be the reason for the failure by Ting to fulfil his RM5 million pledge, as the money should have been handed over 15 months ago.

Finally, is the Government, now that it has taken the Bakun project from Ekran, to be responsible for all the liabilities of Ekran vis-a-vis Bakun dam project, as for instance, in its unilateral cancellation of the contract with the Swedish multinational, Asea Brown Boveri as the main contractor for Bakun.

Ekran Berhad had in the last few years harvested millions of ringgit worth of timber from the project site, caused vast and possibly irreparable environmental damage in Sarawak and uprooted the indigenous communities. Ekran Berhad should pay for all damages that it has inflicted upon the affected residents and the environment.

It has been reported that the Bakun dam project may be modified to cater to power needs in Sarawak. How can this justify the Bakun mega-project to produce 2,400 megawatts, when the Sarawak Chief Minister, Tan Sri Taib Mahmud had said that all Sarawak needed from Bakun dam was only 100 megawatts.


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong