Local energy company Lahad Datu Energy Sdn Bhd paid RM68.2 million (US$22.5 million) as compensation to a China-based contractor for a coal-fired power plant project in Sabah that was scrapped.

peter chin In a written reply to Eric Enchin Majimbun (SAPP-Sepanggar) in Parliament today, Energy, Green Technology and Water Minister Peter Chin said the compensation was the final payment based on the contract.

In 2008, national energy supplier Tenaga Nasional Bhd's ‘new associate', Lahad Datu Energy, inked a RM1.01 billion deal with China National Electric Equipment Corporation to build a 300MW coal-fired power plant in Silam, Lahad Datu, to supply energy to the Sabah east coast.

The plan was abandoned twice before, after protests from locals and the state government.

The first proposal was for it to be built in Silam, Lahad Datu in 2007 and two years later, in Seguntor, Sandakan.

However, the state government had announced in February that it would be cancelling the proposal after much public outcry.

The current proposed plant will be built on Felda Sahabat land, which comes under federal jurisdiction, and will run on coal imported from Kalimantan, Indonesia.

Explaining the government's earlier decision to tap the more expensive but more environmentally-friendly liquefied natural gas (LNG) to generate power in Sabah, Chin said that the power plant may be operational by 2015.

"Apart from that, other renewable energy projects with potential will be developed to meet the demand for energy in the east coast of Sabah.

"Indirectly, the increase in the generator capacity will alleviate the insufficient power supply problem in the state, which is now dependant on diesel power plants that are already old and unreliable," Chin said.