Published January 22, 2009

Tenaga, govt to own most of cable project

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(PETALING JAYA) Tenaga Nasional Bhd and the Finance Ministry will have a majority stake in a special-purpose vehicle set up to build the undersea cable for the RM16 billion (S$6.6 billion) Bakun hydroelectric project, reported StarBiz yesterday, citing sources.

The Sarawak government, which has a majority stake in the Bakun dam, will hold a minority stake in the cable project.

It is believed that the Economic Planning Unit (EPU), which last year received a proposal from Tenaga to undertake the undersea cable project via a consortium comprising the finance ministry and the Sarawak government, has given in-principle agreement and an official announcement will be made soon.

The cable project involves the development of two 700 km underwater cables, estimated at RM9 billion, which will transmit power from the 2,400 MW Bakun dam to the peninsula.

Sources said that Tenaga would operate and own a minority stake in the Bakun dam.

They added that Tenaga proposed to take up a stake that is below 50 per cent in the undersea cable project as it wants to avoid having to consolidate the debts into its books.

The Sarawak government and Sarawak Energy Bhd (SEB) hold the majority stake in the dam.

In June last year, Sime Darby withdrew from taking up a 60 per cent stake in Sarawak Hidro as well as a 60 per cent stake in the company set up to lay the high voltage direct current transmission link undersea cables, although it had received the government's approval in principle.

The decision, arrived at after a 'thorough review', was made by the board which was of the view that the 'project economics do not fit in with the group's business strategy'.

However, Sime Darby has said that it would, via a consortium, continue its role as a contractor in building the dam.

Following that, both Tenaga and SEB had put in a bid to own the transmission link and dam projects. Tenaga, however, mentioned that it would leave it to the Sarawak government and SEB to hold the majority stake in the Bakun dam.