Harlan Thompson and Sam Hui

The Malaysian government is forging ahead with construction of the 2,400-MW Bakun Dam although there is no proven need for the power. Construction of the diversion tunnels for the project was completed in April, shortly after Malaysian Prime Minister Mahathir Mohamed's announcement in February that the project would be revived at its original size. Some 10,000 indigenous people have been forcibly resettled for the project and are struggling to survive on resettlement sites.

Despite the latest construction works, the government has apparently not made a final decision on the dam. The Sarawak Tribune quoted Sarawak Chief Minister Abdul Taib Mahmud as saying, "We will proceed with the contracts in stages while waiting for market conditions to improve...we can make a final and complete decision on Bakun, maybe by next year."

The project would cost $5 billion in US currency and flood a tract of rainforest the size of Singapore. It is being constructed in the remote interior of the Malaysian province of Sarawak, on the island of Borneo. The dam has been dogged by controversy and financial troubles since it's inception. When it was approved in 1994, up to 90 percent of the energy created was intended for export to Peninsular Malaysia via a 650-kilometer submarine cable. The project was shelved in 1997 during the Asian economic crisis. However, the dam was revived in 1999, in a scaled-back version.

LACK OF ENERGY PLANNING

"The manner in which the Bakun dam has been justified-from the original 2,400-MW with submarine cable to West Malaysia, to a downscaled 500-MW dam, now back to 2,400-MW without submarine cable- smacks of very irresponsible policy making. Almost certainly, no serious attempt has been made to justify the project in terms of energy needs and supply," said Dr. Kua Kia Soong, director of Malaysian NGO Suaram.

Diversion tunnels for Bakun Dam are now complete. However, there is still no light at the end of the tunnel for SE Asia's largest infrastructure project.

In the latest announcement, the government claims that the project will supply power to Sarawak and Sabah provinces. However, Sarawak and neighboring state Sabah currently face a power surplus, with reserve margins of 54 and 92 percent, respectively. (A reserve margin indicates how much extra power capacity is available relative to peak demand.) Furthermore, Dr. Syed Husin Ali, president of the Parti Rakyat Malaysia, has calculated that if Bakun is completed, the reserve margin of the two provinces will approach 137 percent in 2006.

The government hopes to sell the excess energy to Brunei and the Indonesian province of Kalimantan. However, both Brunei and Kalimantan are oil rich, with plentiful electricity available at rates much lower than in

Sarawak. Moreover, there is no electrical transmission infrastructure to these areas. Transmission between Sarawak and Sabah may prove too expensive to build, as these neighboring provinces are not yet connected by road. The government hopes that energy intensive industry will move to the region, however, the dam's remote location and the likelihood that electrical rates will be prohibitively high may rule this out.

The Bakun Dam revival comes during an election campaign, with a general election due later this year. The ruling party hopes the dam will help it win votes by appearing to create jobs and pump money into the economy.

FUNDING NOT SECURED

Financing for Bakun has not yet been finalized. In April, Malaysian newspaper The Sun reported that Bakun would be financed by up to $2.1 billion in Islamic bonds issued by the Malaysian Ministry of Finance. The bonds would be raised entirely from the domestic market and guaranteed by the government. Currently, the government is studying an offer by Malaysian utility Tenaga Nasional Bhd to take an equity stake in the project.

In March, Finance Minister Daim Zainuddin announced that the government would open the project to bids from foreign companies, particularly in the supply and installation of electrical equipment and for power transmission work within Sarawak and to Sabah. French energy company Alstom has expressed an interest in the project.

SERIOUS RESETTLEMENT PROBLEMS

While project logistics continue to be developed, thousands of people resettled for the Bakun Dam continue to suffer at resettlement sites. In 1999, 10,000 indigenous Kenyah and Kayan people were forcibly relocated from their ancestral homes to make way for the dam. Most were forced to move to the government-sponsored Sungai Asap resettlement site, while a few communities moved to other sites or remained on their land.

In the past, the indigenous peoples subsisted in a self-sustainable economy, cultivating land, fishing in rivers and hunting in forests. They occupied 70,000 hectares of ancestral lands. Now, living in poorly constructed longhouses and forced into the cash economy, unemployment and hunger are prevalent.

Compensation for people's land has reportedly been paid out, but resettlers claim that the amounts were inadequate and below market-value. Problems with food security are rising as cash-poor villagers are unable to grow food on their small plots of mediocre land. As a result, many villagers have resorted to meals of rice and salt. Alienation has led to increased alcoholism and violence. In recent months the population at the resettlement site has since increased 40 percent, further straining meager resources.

The desperate situation for people living at the resettlement site threatens to worsen in the next couple years, particularly as compensation payments run out and the fertility of their small plots of land drops. It is likely that many will be forced to purchase expensive fertilizers to cultivate food to feed their families.

Further problems loom ahead as residents at the resettlement site must pay back government loans for housing construction. A five-year grace period to begin repayment of the $13,700 in debt is set to run out in 2003. At that time, families will owe an average of $80 per month over a 25-year period. The Malaysian government has offered to reduce payments for families who cannot afford to pay, however, they will still be required to pay back the loans with interest.

"There is not much to look forward to these days," said Junis Win, a Kayan farmer from the Sungai Asap resettlement site. Junis, like many others, is concerned about the future, particularly how he will pay back the housing loan despite the fact that he does not have a stable income.

There are still 100-odd families who refused to move to the resettlement site. Instead, most have chosen to move to the riverside village of Long Buko, further upstream, with plenty of fish, land for cultivation and forest for hunting. They built their longhouses from scratch without any help from the state government, which withheld compensation payments to force people to move to the government-sponsored resettlement site. The only external help they need is access to basic health services and formal education for their children. However they remain vulnerable, since they chose not to move to the official resettlement site and their customary land is not officially recognized. Residents have reported that a number of families from the Sungai Asap resettlement site have asked if they could move to Long Buko.