Extracted from Malaysiakini

Extracted from Malaysiakini.com

SAM: Don’t sink EPF money into Bakun project

4:56:33 PM Oct 28, 2003

Environmental group Sahabat Alam Malaysia (SAM) has created a stink over reports that funds from the Employees’ Provident Fund (EPF) would be used to finance the construction of the disputed Bakun dam project.

SAM said any loan by the EPF could not possibly further the interest of contributors as the project has clearly failed to secure foreign and domestic funding on its own merits.

"The EPF, as a trustee of pension funds of the nation’s workers should not be lending such a huge amount of money to a project whose economic viability and justification remains questionable," said the organisation in a press statement.

SAM criticised the Bakun dam project as an "extremely high-risk" one that is more likely to incur losses than generate profits because of the low uptake of power by potential buyers.

The environmental group said Bakun’s biggest customer to date is a proposed aluminium smelter plant in Bintulu which is likely to consume only 1,000MW from the 2,400MW supply at a secured tariff rate of RM0.068 per KwH.

"However, for the Bakun project to rely on a single smelter which will absorb over 40 percent of the dam’s capacity is too much of a risk. If the smelter goes under, so, too,, in all probability will Bakun," it warned.

Low dividends

SAM said EPF could ill afford such a bad investment if its recent dividend payouts are anything to go by.

"In recent years, we have seen EPF dividends steadily decreasing. RM2.5 billion represents between 1 percent and 1.5 percent of EPF dividends. If the fund could not afford to pay this extra amount to its members, how can it even consider lending it to a financially uncertain project?"

Another grouse is that two other potential buyers of electricity - the Sarawak Electricity Supply Co Bhd and Sabah Electric Sdn Bhd. - would not need the power generated by Bakun’s excess capacity at least until 2008.

Therefore, contrary to claims by dam proponents that hydroelectricity is cheap, SAM said the insufficient demand would make Bakun the most expensive power project in the country.

In recent years, falling dividend rates for EPF savings have drawn protests from union groups.

In May, the Malaysian Trades Union Congress (MTUC) held a 500-strong picket deploring the lowest ever dividend payoff by the EPF in 40 years, set by the government at 4.25 percent for 2002.