Sime Darby Bhd does not anticipate any delay in its US$2bil Bakun undersea transmission cable project in Sarawak despite recent market talk that the project would likely miss its targeted deadline in 2013.
A spokesman told StarBiz that the undersea cable project at this stage was on track and negotiations with the involved parties are still on going.
Of late, many quarters have expressed concern over the progress of the Bakun transmission system, citing snags in the terms and agreement of the project with the involved parties.
An industry source claimed that Sime Darby, which has a 60% stake in the revived undersea cable project, still has yet to sign the heads of agreement with its consortium partners Tenaga Nasional Bhd and the Ministry of Finance, which have a 20% stake each.
The source told StarBiz that work must start soon to enable the first undersea power cable to deliver electricity by 2013 and the second cable in 2015.
Among the areas of concern is the delay in the announcement on the winner of the pre-qualification tenders for the Bakun transmission system. This includes the design, manufacture, testing, delivery, installation and commissioning for the high-voltage direct-current link for power transmission to Peninsula Malaysia.
Furthermore, Sime Darby is perceived as being “slow” to wrap up the negotiations on tariffs and formalise a power purchase agreement (PPA) with Tenaga on the Bakun project.
The Bakun hydroelectric dam project is targeted to generate 2,400MW of power, of which 1,600MW will be transmitted to Peninsula Malaysia via underwater cables.
Market observers said a potential big user of Bakun power output would be the proposed Sarawak Aluminium Co Sdn Bhd's (SALCO) RM7bil aluminium smelter plant in Sarawak, which is believed to be eyeing for at least 900MW.
SALCO is a joint venture between Rio Tinto Alcan Group and Cahya Mata Sarawak Bhd (CMS).
Rio Tinto Alcan general manager (smelter development) Matt Liddy told StarBiz that SALCO had, to-date, not signed any agreements with Tenaga or Sime Darby for the provision of power.
However, both Rio Tinto Alcan and CMS had, in February, signed a memorandum of understanding with Sarawak Energy Bhd to allow negotiations on supply of power to commence.
“Our discussions are underway and a PPA is expected to be signed in the coming months,” he added.
Liddy said the price of power was yet to be decided but the long-term availability of reliable and internationally competitive power supply was one of the fundamental elements for building a new aluminium smelter.
He said: “A final decision to proceed with our smelter project will not be made until we know the requisite infrastructure will be in place and availability of energy is confirmed.”
The initial capacity of the SALCO smelter is between 550,000 and 720,000 tonnes and will require about 900 to 1,200MW of power, Liddy said.