FEATURE-Malaysia's plan to dam its frontier for energy generates dismay

MURUM, Malaysia, Dec 14 (Reuters) - The trucks that ply the

rough road to the Murum dam under construction in Malaysia's

Sarawak state kick up clouds of dust that obscure the trail and

make driving treacherous. Within an hour, at least 40 of them go

by, laden with freshly cut timber.

The dam on a tributary of the Rajang river is just the start

of a staggeringly ambitious plan to block many of the state's

major waterways by 2020 to tap cheap energy and turn one of

Malaysia's poorest states into a Southeast Asian industrial and

energy hub.

Leveraging energy from the state's numerous rivers and what

it calls a strategic location between China and India, planners

envisage up to 12 dams by 2020.

But that could leave the state with more than 20 times more

energy than it now needs and critics, including opposition

politicians, say that Sarawak simply does not need so many

hydro-power dams.

The plan is also attracting growing opposition from

environmentalists and groups representing indigenous tribes, who

say it is an environmental disaster in the making that will

enrich an elite few.

Towering over the $110 billion plan - known as the Sarawak

Corridor of Renewable Energy, or SCORE - is Chief Minister Abdul

Taib Mahmud, a 76-year-old patriarch who wields sweeping

policymaking powers after three decades in charge of the state.

"He runs Sarawak like a private business for his own

benefit," said Clare Rewcastle-Brown, who runs the whistleblower

website Sarawak Report and is the sister-in-law of former

British Prime Minister Gordon Brown.

"Taib seems determined to empty out whatever forests are

left, turning the state into a drab industrial estate."

Taib says the project will generate high-skilled jobs and

help transform Sarawak, on Malaysia's side of Borneo island,

into the country's richest state.

The state chief, who also serves as the state's resource

planning minister and finance minister, has been under a

Malaysian anti-corruption agency investigation since 2011 but no

charges have been brought. His huge influence in Sarawak makes

him a key ally for the ruling coalition ahead of an election

next year that is expected to the closest in Malaysia's history.

Taib denies allegations of wrongdoing and his office did not

respond to repeated Reuters' interview requests. The chief

minister, whose chauffeured Rolls Royce is a common sight in

Sarawak's capital, Kuching, has said his family's wealth is a

result of its business acumen.

"You can see how much progress Sarawak has made during his

time," Mahathir Mohamad, Malaysia's former long-serving prime

minister, told Reuters in an interview.

"He wants to develop more power there but he has been active

in selling power ... he's bringing a lot of industries there."

BLOW TO SHRINKING FOREST

The wave of dam-building in Sarawak has brought more

scrutiny to links between environmental damage in Malaysia's two

Borneo island states and global financial institutions.

Global Witness, a British-based investigative group, has

criticised HSBC Bank's role in funding companies it

said were logging illegally in Sarawak, saying it was against

the bank's environmental guidelines.

HSBC declined to respond to a request for comment.

Swiss prosecutors opened a criminal investigation into UBS

in August after the bank was accused of laundering

money from illegal logging in Sabah, another Malaysian state

that borders Sarawak. UBS has said it is cooperating with the

prosecutors.

At the heart of the plan for Sarawak is attracting foreign

companies, through cut-price power and low taxes, to set up

energy-intensive industries such as aluminium smelting and steel

production.

The state says it has secured investments of 29 billion

ringgit from companies from various countries including the

United Arab Emirates, Australia, Hong Kong, Japan and Malaysia.

A total of 334 billion ringgit of investment is expected by

2030.

Stressing its environmental credentials, the project's

website shows a picture of an indigenous tribesman against a

verdant background of plants and a waterfall.

That is in stark contrast to environmentalists' fears that

the dams could deliver a final blow to Sarawak's forests, which

they estimate have shrunk to 5 percent of land cover. The state

says forest cover is 70 percent, but activists say it uses a

broad definition that includes rapidly expanding palm-oil

plantations.

When Reuters visited the Murum site in October, dozens of

bedraggled villagers from the Penan tribe had been camped out

for three weeks, blocking access to the dam that will flood

their ancestral land in Sarawak's remote northeastern corner.

"Never mind everything, the tiredness, the rain, the heat,

we must do this," said 36-year-old grandmother of nine, Layu

Kara, between mouthfuls of the sticky sago palm paste and jungle

fern that made up her first meal for the day.

The villagers, among 1,500 people who will be displaced by

the 4 billion ringgit dam, were demanding compensation for their

land. The next major dam in the works, Baram, will displace

20,000 people, say rights groups.

Chinese companies, some of which have been involved in other

controversial hydroelectric projects, are building Murum and are

in a strong position to bid for others. Sinohydro Corp

completed Bakun and another Chinese company, the

Three Gorges Corp, builder of the giant dam of the

same name in China, won the bid to construct the Murum dam.

TOO MUCH ENERGY?

Critics of the plan question the strategy of producing an

amount of energy that is far in excess of current demand,

pointing at problems in finding buyers for power from the

existing Bakun dam, completed in 2011, that flooded an area the

size of Singapore.

State energy company Sarawak Energy Berhad says it

already has buyers for all of Murum's 944 megawatts (MW) of

energy and a "long queue" of potential customers for future

projects.

Sarawak Energy, which is awarding many of the project's

contracts, says it also plans to sell energy to peninsula

Malaysia and Brunei, as well as to Sabah and Kalimantan, in the

Indonesian part of Borneo.

But it lacks those grid connections, and a planned undersea

cable to the energy-hungry peninsular was abandoned in 2010.

The Bakun dam is capable of producing 2,400 MW, well above

the state's current needs of about 1,000 MW. The project was

labelled a "monument to corruption" by the Transparency

International group.

"Sarawak doesn't need 12 dams. Bakun alone is enough. We're

not supplying power to the peninsular, to Brunei or to

Kalimantan," said Baru Bian, an opposition state assembly

member.

In a blow to Taib's plans, Bakun lost what would have been

its biggest customer in March when Australian mining giant Rio

Tinto pulled put of a plan to build a $2 billion

aluminium smelter, blaming a disagreement over pricing.

Sarawak Energy says the 1,500 villagers displaced by the

Murum dam will be suitably resettled and given land they can

cultivate. It hasn't reached a deal on compensation.

The Penan villagers in the Murum blockade were prepared to

wait, within sight of the forests that have been crucial for

their food and income.

"We've never had money in the bank, now we're losing the

rivers, the trees and our livelihoods," says 60-year old village

elder Madai Solo.

($ = 3.046 ringgit)

(Additional reporting by Stuart Grudgings; Editing by Stuart

Grudgings and Robert Birsel)

Most Popular in Business