Work on the multi-billion ringgit Bakun hydro-electric dam in central Sarawak is now six months behind schedule and the project may even be postponed if problems that beset the consortium are not resolved, according to sources.

Sources close to Sarawak Hidro Sdn Bhd - owned by the finance ministry - said the contract "has reached a delicate stage" and that the 2,400MW project is unlikely to be completed on target in September 2007.

Malaysiakini had reported in July that ' organisational problems ' were holding back progress on the project, which has attracted controversy since it was mooted because of its environmental impact and the displacement of indigenous peoples from native land that will be flooded.

A seven-member consortium is leading the civil and engineering works, but the sources said the project has been affected by "inexperience" on the part of the turnkey contractor.

The company concerned could not be reached for comment yesterday, but malaysiakini is continuing efforts to reach its officials.

One source said the site work mainly involves two companies in the joint-venture project, while the remaining partners are sub-contractors who are waiting for their respective packages of work to be commissioned.

The consortium is liable to a hefty penalty for delays beyond the stipulated period of completion.

Investors waiting

The greatest impact of the delay is likely to be felt among potential local and foreign industrial investors who are interested in setting up smelting plants in Similajau to tap at least 1,000MW of energy produced by the Bakun dam when it comes on stream.

However, the sources said "there appears to be a lack of urgency mainly because of the status of construction work in Bakun".

Malaysian business weekly The Edge had earlier reported that several parties, including China's Press Metal Bhd and Australia's listed company BHP Billiton, had expressed interest and had started talks with Sarawak Hidro about this.

Their particular concern would be that their own operations would have to be timed to correspond with the start of energy production.

The sources also said the Sime Engineering Sdn Bhd-led consortium intends to approach Sarawak Hidro for a review of the RM1.8 billion contract for several reasons. It is said to be keen to find out if the finance ministry will consider any request for variation of the contract.

"With a tight-fisted government in place and where every sen now counts, that request may be difficult to meet, especially if the employer's engineers feel the long delays are basically due to the turnkey contractor's inexperience," said a engineer familiar with the project.

Geological conditions

The Edge had previously reported that the consortium claimed it had encountered problems due to geological conditions at the site which they claimed were never documented in the first place.

However, officials on site have dismissed this as "nonsense" and denied that there are not enough rocks for the rockfill aspect of work.

"If they excavate deep enough under the river bed, they will find there are rocks. Besides, there are many hills and mountains nearby from which they can source rock materials," an official told malaysiakini .

On claims there are faults on the hillslopes leading to the dam site, the official said the turnkey contractor should know the real situation " if they have been looking at the geological maps which are marked in colour-code".

"The information is all there and if they have read it they should know what is there and what is not there," the official said.

The sources also questioned the consortium's claims about geological conditions, saying these should be put in writing.

"If the consortium is sure that the delay is not because of inexperience and internal problems like management and contract structure, why don't they say so?" a source asked.

"There are regular meetings on site at various levels. Everyone knows what is going on and where the problems lie."

If the situation goes to arbitration, this would cause further delays and possibly a second postponement of the project.

The government took over the previously privatised project and revived it in 2001. It had been shelved during the 1997-1998 East Asian financial crisis when the main operator fell into debt.

TONY THIEN is malaysiakini 's Sarawak-based stringer.