by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Wednesday, 1st November 1995:
I have received a most shocking reply from Leo Moggie that up to now, the financing arrangements for the RM15 billion Bakun dam project has not been finalized.
I have received a most shocking reply from the Minister of Energy, Telecommunications and Posts, Datuk Leo Moggie that up to now, the financing arrangements for the RM15 billion Bakun dam project has not been finalized.
I had asked Leo Moggie a parliamentary question “What is the financing arrangement for the RM15 billion Bakun dam project, whether all financing required had been secured, giving details as to sources of funding and amounts; and to specifically outline the financial proposals whether made by Ekran or by KWSP with regard to committing KWSP funds in the Bakun project and the progress of each such proposal.”
The reply from Leo Moggie is only one short paragraph, namely:
“Untuk makluman yang berhormat, Ekran Bhd. Masih lagi belum memuktadkan rancangan pembiayaan projek hidroelectrik Bakun. Oleh yang demikian maklumat-maklumat seperti yang di minta oleh Yang Berhormat mengenai rancangan pembiayaan ini tidak dapat dikemukakan.”
This is most shocking, as the Bakun dam project is already in a very advanced stage of implementation yet the financing arrangements had not been finalized and the Minister for Energy, Telecommunications and Posts could give no report whatsoever to Parliament on them.
There are valid grounds for concern as Ekran Bhd. Had no confidence to announce the rating of its earlier RM300 million, five-year zero coupon bond issue. Ekran claimed that this financing proposal for Bakun was aborted because the amount to be raised was not large enough, although news report had said that Ekran had given up its proposed bond issue after it was rated speculative grade by the Rating Agency Malaysia (RAM) early this year.
There is no doubt that if the Rating Agency Malaysia had given top rating to Ekran’s earlier proposed RM300 million, five-year zero coupon bond issue, Ekran would have taken full-page advertisements in all the local newspapers so that the whole world would know about its top-quality rating!
An issue rated lower than investment grade in Malaysia is not allowed to raise funds. The issuer has the right to reject the rating and give up the issue or get the grade enhanced through Bank guarantees.
If Ekran disputes the report that its earlier bong issue was rated as “speculate grade”, it should make public the RAM’s rating! Otherwise, there will continue to be question marks over Ekran’s projects, particularly the RM15 billion Bakun dam project.
Ekran has since replaced the bond with a RM1.89 billion rights equity issue which was announced in August. What has happened to this issue?
The RM15 billion Bakun dam project, which is the single biggest privatization project, is mired in controversy, both environmental, socio-economic, technical and financial, which are all inter-connected. For instance, the controversy over the actual power output capacity of the Bakun dam is closely connected to its financial viability, as the capacity of Bakun dam – whether its firm capacity is 80%, 70%, 60% or less – would directly determine its long-term financial returns and viability.
As there is a proposal to make huge commitment of EPF funds in the Bakun dam project, workers in Malaysia are entitled to know the full facts of the Bakun dam project and to be convicted that this is a worthwhile investment which would not jeopardize the long-term security and profitability of EPF funds which are meant to be provident funds for workers in Malaysia.
The Energy, Telecommunication and Posts Minister Datuk Leo Moggie should not just tell Parliament that the Financing arrangements for the Bakun dam project had not been finalized, but explain why it is taking Ekran Bhd. so long to finalise the financing arrangements for bakun dam, and whether Ekran is finding difficulties to get all the necessary financing needed for the project.
This raises a further question: why the Sarawak State Government issue Ekran Bhd. with a timber license on June 1, 1995 to extract timber from 56,000 na in the Bakun area (which enabled Ekran to sell the rights to extract 3 million cubic meters of timer, which is one-quarter of the concession rights, for RM405 million cash) even before (i) EIA reports for the entire project had been approved and (ii) full financing for the project had been finalized!