The controversial billion-ringgit Bakun hydro dam in central Sarawak is about 15 months behind in the civil and engineering works, and the consortium undertaking them stands to face a hefty penalty for the delay, according to reliable sources.

"If any delay cannot be justified in any way, the penalty is RM1 million daily," the sources said today.

The project, awarded to a Sime Engineering Bhd-led consortium comprising Chinese and Malaysian business partners, is supposed to be completed in 60 months and delivered the latest by September 2007.

According to sources close to the project owner, Ministry of Finance-incorporated company, Sarawak Hidro Sdn Bhd, the assessment of the delay period is taken from the time construction of the integrated coffer-dam commenced.

The consortium won the contract for the civil and engineering works when they bid at a lump sum of about RM1.8 billion, believed to be the lowest.

Prime Minister Abdullah Abdullah Ahmad Badawi said recently that the project would go on as the government had already invested a lot of money in it.

Prior to the Sime Engineering group, the project was given to public-listed Ekran Berhad, a company controlled by businessman Ting Pek Khiing, but work stopped when the company ran into financial troubles during the 1997-98 economic downturn.

RM1.6 billion spent

Before work re-commenced, the government had already spent an estimated RM1.6 billion on compensations both for work already done on site, including the completion of a coffer dam by another Ting company, Global Upline, and on resettlement of 10,000 natives.

These sums plus the civil and engineering work contacts as well as the RM1 billion on the eight turbines brings the total project cost to about RM5 billion for a hydro dam that will generate 1,400 megawatts of electricity.

Presently, Sarawak generates more than enough of its own electricity through the local electricity company's gas, coal, hydro and diesel stations.

Up to now, it is still not known who the buyers for the Bakun electricity will be.

The sources told malaysiakini that work, however, is still going on albeit slowly in Bakun.

"We heard the consortium is going to re-organise their internal management structure, giving bigger roles to some (of the partners) so they could be more effective."

Chinese reputation

Talk is that the Chinese partner which has a 30 per cent stake wants to assume a bigger role, especially in project management to ensure that the project is completed.

"They are very concerned about their reputation," the sources said.

"There are key factors (for the delay) that are outside the contractual rights and we cannot give them instructions on what to do.

"Among such key factors are geology and hydrology, and it will be difficult from our view for the consortium to find any justification for project delay and avoid penalty," according to sources.

Meanwhile, malaysiakini learnt that the government has been talking to various parties, both local and foreign, who have expressed interest to invest in smelter plants in Bintulu.

But this, according to sources, will depend on the cost of the power which must be competitive, as similar offers have been made to the same interested groups in other countries to site their projects.

TONY THIEN is malaysiakini 's Sarawak-based stringer.