The government's RM4.5 billion Bakun dam will proceed as planned, a senior minister said today, dismissing speculation that the government is considering pulling out of the controversial project.

"We will continue with the Bakun dam but certain things need to be tied up fast," Lim Keng Yaik, energy, water and communication minister told reporters.

The Edge newspaper reported at the weekend that the government was again taking a look at the 2,400 MW Bakun hydroelectric project and its viability.

"A lot of money has already been sunk into the project but there are still so many uncertainties," it cited a source as saying.

"The question now is, should more money be sunk into the project to complete it? Or should the government cut its losses now, as it could become a case of pouring in lots more good money after bad?", the source said in the report.

Lim said the government hopes to finalise quickly who would be the buyers of the electricity and its pricing but declined to elaborate further.

Currently, only an aluminium smelter is prepared to take 1,000 MW and there are no firm takers for the remaining power, leading to speculation the project could be scaled down to a total of 1,200 MW.

The smelter is part of a US$2 billion project in Sarawak by GIIG Capital, which is controlled by tycoon Syed Mokhtar Albukhary. The fate of this project itself is in question after its Dubai-based partner pulled out last December.

New proposals

Prime Minister Abdullah Ahmad Badawi, who is also finance minister, has said the government is open to new proposals and stressed the Bakun project must proceed because a lot of infrastructure work has already been done.

The government took over the Bakun project and revived it in 2001 after it was shelved during the 1997-1998 Asian financial crisis when the main operator fell into debt.

Sarawak Hidro Sdn Bhd, the operator of the dam has so far spent about RM1.5 billion and the project is expected to eventually cost RM4.5 billion.

The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism because of its effect on the environment and some 10,000 residents who have already been moved out. - AFP