DPM says Bakun dam price tag not fixed yet

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KUALA LUMPUR: The price tag on the Bakun hydroelectric dam has yet to be fixed, although the federal government has decided to sell the asset to the Sarawak state government.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said yesterday the federal government will negotiate with the Sarawak government and  come up with a “reasonable price”.

Muhyiddin also disclosed that the federal government has not decided whether to divest its equity stake in PLUS Expressways Bhd. Speaking to the media after the opening of the World Capital Markets Symposium 2010, the minister confirmed that the central government would sell the nation’s biggest hydroelectric dam to the Sarawak government but the details, for instance the final price tag and method of sale, needed to be ironed out.

“In principle, the (federal) government has indeed agreed (with the sale) as announced by Datuk (Seri) Peter Chin,” Muhyiddin told reporters after delivering the keynote address at the symposium.

The deputy PM dispelled speculation by certain quarters that the sale of the Bakun dam to the Sarawak government was a bailout. He stressed that it was purely a “commercial deal”.

“The deal that will take place will take into consideration the cost of the project and the benefit of the two parties,” Muhyiddin added.The overall cost of the Bakun project was officially put at RM7.3 billion, but due to cost overruns, compensation for delays and interests, the final cost is said to have escalated. The project, which was initially targeted for completion by December 2007, is currently about 98% completed.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui was reported to have said that the federal government and Sarawak had started negotiations to determine the price of the Bakun dam project.

Over the weekend, Sarawak Chief Minister Tan Sri Abdul Taib Mahmud also told the media that the state government had placed a bid of over RM6 billion to buy the Bakun project from the federal government.

Nonetheless, TheEdge Financial Daily learnt that the offer from the Sarawak government was not the highest among a field of three bidders.

It is understood that 1Malaysia Development Bhd (1MDB) offered RM8 billion while the highest bid of RM8.8 billion came from a tripartite partnership led by the Qatar Investment Authority.

“It is normal for people to make a lower offer when they want to buy something. But I believe the deal will be finalised at a reasonable price that will be agreed to by both parties,” said Muhyiddin, when asked to comment on the higher offers by other bidders.  

However, Muhyiddin said he was not at liberty to disclose the highest bid submitted to the cabinet.

He was also tight-lipped on the timeline for the negotiations between the federal and Sarawak governments.  

Commenting on market talk on the sale of PLUS, Muhyiddin said there was no “final decision” on whether to sell the toll road operator, which is considered a cash-generating asset for the federal government.

“I don’t think I have anything further to say at this stage,” he said when asked if the government was in talks with any parties on hiving off PLUS.

The federal government holds its equity stake in PLUS via Khazanah Nasional Bhd, which wholly owns UEM Group Bhd. Khazanah holds direct and indirect stakes of about 55.25% in PLUS.

Speculation has been rife on the disposal of PLUS for more than a year after a private company, Asas Serba Sdn Bhd, mooted a plan to take over all toll road concessionaires in the country, including the North-South Highway owned by PLUS, for RM50 billion cash.

The latest from the grapevine is that a privatisation deal might be in the offing. TheEdge weekly quoted sources as saying that Khazanah was exploring options to monetise the toll operator.

One option was said to be selling its equity stake to the Employees Provident Fund (EPF). A mandatory general offer would be triggered should the latter take up the chunk of shares.

But the EPF has denied that it was looking at buying into PLUS.
This article appeared in The Edge Financial Daily, September 28, 2010.