WITH the snags over underground cables and soaring cost, Sarawak planners, industry experts, activists and locals explore the options with DESMOND DAVIDSON and SANTHA OORJITHAM.

Is Sarawak's Bakun dam on track to become the largest source of cheap, renewable energy in Southeast Asia? Or will it become a multi- billion ringgit white elephant?

Sime Darby Bhd's recent pullout from the RM6 billion submarine cable project that was to transport power from the dam to the peninsula and its decision not to take a stake in Sarawak Hidro Sdn Bhd (cable developer and owner of the dam), have renewed concerns about its viability and whether it should be part of the peninsula's power mix.

At the end of last month, Sime Darby president and group chief executive officer Datuk Seri Ahmad Zubir Murshid said "the project economics do not fit in with our business strategy" although the company would continue as a contractor to complete construction of the dam.

The 2400mW dam, in which both the Finance Ministry and the Sarawak government have stakes, is expected to be generating power by 2011.

Second Finance Minister Tan Sri Nor Mohamed Yakcop has said the government would talk to Tenaga Nasional Bhd (TNB) and relevant parties to find an alternative solution after Sime Darby's exit. He still hopes the cables can be laid by 2013.

"But if Sime Darby calculated that it couldn't recoup its investment, who can?" asks Jennifer Rubis, director of the Sarawak- based non-governmental organisation, Building Initiatives in Indigenous Heritage (BIIH), part of the Network of Indigenous Peoples of Malaysia.

Even some who originally argued for the hydroelectric project as a cheap source of renewable energy now say the power it generates will be as expensive as an oil or coal-fired plant.

"The window of opportunity was in early 2000," says a former TNB engineer.

"The technology was there and metal prices were low. If the dam had been built then, it would have cost a third of what it's costing now and we would have benefited."

(The cost of both the dam and the cables is now estimated at more than RM20 billion.)

The price for power transmitted from Bakun to the peninsula could be as high as 30 sen per kilowatt hour, explains an industry source. In addition, the project has to cover technology, construction and sovereign risks.

About 70 per cent of the 700km route for the undersea cables passes through Indonesian waters, south of the Natuna archipelago.

"There could be security risks as well as risks from fishing and other shipping activities where the cables are laid in shallow waters near the coastal areas," he points out.

"But they can't set a higher tariff because it would be hard for the government to justify."

Whether the dam is viable depends on the cost and the selling price, says a local analyst covering the power sector.