Deputy Finance Minister Ahmad Husni Mohamad Hanadzlah (BN-Tambun) today admitted that the cost to construct the electro-mechanical turbine for the Bakun Dam project in Sarawak will balloon from the initial estimation of RM50 million to RM349.46 million.

ahmad husni hanadzlah Husni, who made the admission while replying to Azmin Ali (PKR-Gombak) on why the cost had snowballed, brushed aside any presumptions of wrongdoings behind the increase.

"The Argentinian company BEM1-C Contract Consortium (IPMSA) that was awarded the contract had demanded such an amount after taking into consideration various significant issues like the rise of raw materials and transportation costs.

"Apart from that, other costs like the main buy-out and the time extension of finalising the Draft Tube Erection had also contributed to the rising costs," explained Husni.

He however conceded that the price demanded by IPMSA was high and promised that his ministry via Sarawak Hydro Company Sdn Bhd (SHC)- the company created by the ministry to handle the Bakun dam -will do its best to negotiate for a lower price.

The project has been shrouded in controversy ever since the government announced its intention of erecting the multi-billion hydro-electric dam.

From alleged forced eviction of natives inhibiting Bakun to exorbitant costs, the government's only defence is that the project will benefit the people, not just in East Malaysia, but the entire nation.

This was again echoed in the Dewan today when Husni said that Bakun is estimated to generate RM1.5 billion in revenue if it is assumed that Tenaga Nasional Berhad are to purchase each electro watt at 18 sens by 2012.

And as for the displaced natives, Husni said the government has done its best by ensuring that the 10,000 natives are well-compensated and that houses will be built for them.

Govt can't bear costs

Husni was also pressed to explain why 60 percent of SHC's shares were sold to a company that was awarded a contract to handle the civil engineering aspects of the project - Sime Darby subsidiary Sime Engineering.

On Nov 17, Sime Darby announced that the government had allowed Synergy Drive to acquire 60 percent of SHC's share.

bakun dam scale model of completed project 301007 Synergy Drive is the vehicle merging state-linked firms Sime Darby, Golden Hope Plantations and Kumpulan Guthrie and their subsidiaries in an US$11 billion deal that will also create the world's largest listed palm oil firm.

"The government cannot bear the high costs of the project and therefor must look for an alternative. When Sime Darby showed interest, it was a win-win situation for us," explained Husni.

Elaborating, the deputy minister said that since Sime Darby is a government-linked company (GLC), there is no question when it comes to ensuring that the project is a success.

"Furthermore, Sime Darby has excellent cash flow and is in a position to bear the costs of such expensive projects," he added.

No cronyism

As for allegations of cronyism, the deputy minister denied that the government was practicing favouritism when it comes to awarding contracts pertaining to the Bakun dam project.

"We did not award tenders to individuals but instead opened the tender application process even at the international level so that the best company will be assigned to execute this extremely big project," he said.

Husni said the tender was awarded to Malaysia China Hydo Joint Venture Consortium.

The consortium includes involvement by Sime Darby, Syno Hydro and several other companies which the deputy minister did not name.