Malaysia pays $167 million after delays to troubled dam

KUALA LUMPUR, Oct 02, 2013 (AFP) - Malaysia's government agreed to pay US$133 million (S$167 million) in compensation to two foreign contractors for losses incurred in the problem-plagued Bakun Dam, an audit has revealed.

The compensation, revealed in the Auditor-General's annual report, is a rare official acknowledgement of problems in a highly controversial project that Transparency International once labelled a "Monument to Corruption".

The report submitted to parliament Tuesday said two contractors suffered delays of up to four years in civil engineering works, causing their costs to spike.

The contractors were French-based Alstom and Impsa-Malaysia, which is largely controlled by Argentina's Impsa group.

The US$2.3 billion dam, which began operations in 2011, is the largest in a series of hydroelectric facilities in the heart of the Borneo rainforest that have been completed or are planned by the government of Sarawak state.

Environmentalists, anti-graft activists, and native tribes denounce Bakun - which has reportedly displaced more than 10,000 native tribal villagers with its Singapore-sized reservoir - as a corruption-plagued environmental and human disaster.

Sarawak's chief minister, Taib Mahmud, has repeatedly denied mounting accusations of enriching himself, his family, and cronies through a stranglehold on the state's economy, including the dam projects.

The start-up of Bakun's turbines in 2011 came five decades after it was first proposed, following funding problems, tribal protests, and corruption accusations.

The Malaysian government has never publicly investigated the allegations swirling around the project.

Despite Bakun providing more than double Sarawak's energy needs, a series of other dams are in the works.

Taib's government says it must provide energy to lure investors to the state, one of Malaysia's poorest.

His opponents say companies linked to Taib are the main beneficiaries of the cheap energy and contracts related to dam construction.

Critics accuse Malaysia's central government of refusing to probe Taib because he controls parliament seats vital to the ruling coalition.

Taib's dams have met with increasing indigenous protests. More than 100 tribesmen are now blockading access to another dam at remote Murum to demand compensation, activists say.